The reason you can use dry ice — carefully — in a Halloween cocktail is because of its density. A cube of dry ice will sink to the bottom of a drink, and it will eventually dissolve over the course of five minutes or so. The one huge no-no for a dry ice cocktail is to let the dry ice touch your skin, so tell your guests to sip slowly and carefully, especially when it's smoking, and by the time there's no more smoke, the drink can safely be finished (from The Rose Table). It's also got the benefit of keeping the drink nice and cold. And remember, when you're serving dry ice, always handle it using tongs (via Betty Crocker).

You can also use dry ice in a punch bowl set-up by putting a small bowl inside a larger one, with an inch or so between them. Then, you put small bits of dry ice between the bowls and put the punch in the inside bowl. To amp up the smoke / fog of the dry ice, pour a little bit of water between the bowls (from HGTV).