I used a pearl grey color dye, which actually turned out really well. Just follow the directions on the package. I only soaked the shirts in the dye for five minutes. Then wash and dry your shirt. Carefully peel off the letters you intend to use (they tear very easily), and iron on.
A nod to one of my favorite movies from the 80's:
Since it's difficult to find good band t-shirts in a size 4T:
I wouldn't normally have them wear them on the same day. I think that would scream, "my mom made these".