Advice on setting up a shell server

I'm trying to set up a small shell account server for students at my  
school, and it seems to be quite a vast undertaking, mostly because  
of the security issues brought up by letting semi-anonymous people  
access my machine. How do other shell servers (like sdf.lonestar.org)  
implement an automatic user-adding system? Is having publicly  
runnable shell scripts insecure? Any suggestions on where i should  
start would be greatly appreciated



Those who make peaceful revolution impossible
will make violent revolution inevitable.
                 -- John Fitzgerald Kennedy