Thanks (once again) to the Lookjed list, I have just learned of a very interesting resource that is on-line – a list of the top 1000 words most frequently appearing in the siddur and tenakh and a comparison of the frequency of their use in modern Hebrew literature (the original source is Prof. Shlomo Haramati, 'Havanat haNikra baSiddur uvaMikra' published by the Jewish Agency, Department for Religious Education and Culture in the Diaspora 1983) .
Now, couple this with Rahel Halabe's assumption that the top 100 most frequently used words actually account for nearly 60% of all the words that are used, and it becomes clear that any word that receives a rating of I – alef – 1 would be an especially useful word for your students to know.
And what are some examples? Yom, Lo, Hu/Hi, Melech, Natan, Aseh, Olam, Shem...
So, if your students manage to learn only 100 useful words over the course of their Hebrew studies, as long as they are the right words, it will actually give them a huge head-start not only in understanding the siddur, but also in reading the Bible and in conversing in Hebrew!
An excellent resource for discussion of teaching Hebrew in the diaspora is the wiki The Hebrew Project. Of particular note are Avram Mandell's description of his "Derekh Ha-Limmud" program, the Hebrew literacy "manifestos" of Nachama Skolnik Moskowitz and Isa Aron, and Lifsa Schachter's essay on teaching the Hebrew alphabet and decoding. But there are many other interesting and useful things to discover there.
Lookjed is a project of the Lookstein Center for Jewish Education.