Instead of useing small Co2 catridges could you incorporate a larger Co2 Cartidge into the frame with a trigger that allows required air out on each pull.
Then you have recycleable Co2 and no worries about co2 catridge hurting anyone.
Cut a nerf football in half attach something like half a 600ml pop bottle attached to that. Then fill with bbs/flour whatever. not sure how you would incorporate parachute in this design though. Sounds crude but might work..
would probably have to put a bit of weight in half of nose of rocket though(nerf)
Maybee use something in that rocket that reacts to being shot so it seperate top and bottom in mid flight. thus deploying parachute attached to each end of rocket(inside)