Lunges are a true pain ! It sounds like you are doing everything right.. teaching the options is super important. Working lunges without weight sounds good these folks until they develop better form and ROM. Ensuring they maintain the integrity of the knee joint by keeping it at an angle wider than 90degrees. In time they will get lower as they feel more secure.. Check their hips are square and tucked. There is a tendency with beginners also to turn out their back toes, this can put alot of stain on the knee...make sure they are pointing them forward. Also importantly the width of their feet need to be as wide as their hips for their stability and safety.
Thing about the knees is that if the quads n hams are not stong there´s very little support for the knee, strengthening all of the leg muscles is super important... so they just have to keep coming back to class.
I give students with similar obstacles the option to use the bar vertically for support... reinforce... ¨ little by little, keep coming back, keep practicing with me¨ and ¨do as much as you can... listen to your body¨. let them know their bodies will adapt to the exercise as they continue to train with you. Its much easier to teach good technique right from the start, strengthen slowly and help prevent injury than try and correct it all later.. They are lucky to have a concerned instructor like you... way to go..
List of things to do today.
breathe in
breathe out.