My Grade 6 students are in the middle of a Medieval Art unit. They recently finished up their illuminated initials. I started off by showing a slideshow on illuminated manuscripts, gave some brief history, etc. We watched a great video on how illuminated manuscripts were made from the Getty Museum.
Students started of by drawing a border using a ruler. Then they chose whichever letter they liked; I asked them to choose a letter representing someone special to them. Then they 'illuminated' the letter. They could choose to go the traditional route or create more contemporary designs.
This book from Dover publications came in handy to help inspire students who needed extra visuals.
Once the drawing was complete, they outlined everything using an ultra fine Sharpie. Then they used small brushes and watercolours to paint their illuminations. Once dry, they used some gold markers to add some metallic accents (to mimic traditional gold leaf).