Ancient Egypt is a fascinating place all these years later. From mummies and pyramids to pharos and scarabs there is plenty of fuel for the fascination pyre. Keep in mind however, that the goal here is for the kids to have a great time, not to be frightened so keep the scary stuff to a minimum if possible (even if your child is brave to a fault that doesn't mean that some of the guests won't be frightened and you want the experience to be pleasant for everyone).
Decorations for this are not as difficult as you may think. In fact, some of these decorations will double quite nicely for Halloween or may already be in your Halloween stash. First of all, if you have a canopy or tent lying around this will make an excellent substitution for a pyramid. You can fill your canopy or tent with relics that are authentic looking for what would be inside an Egyptian pyramid. Use skulls (leftover from Halloween decorations) on the floor, gold coins (or doubloons, which can be purchased rather inexpensively at many party supply stores), sequins that look like jewels, and fake jewelry that might have been worn during the period. Of course the piece de resistance will be the mummy wrapped in the corner (if this isn't part of your Halloween stash it should be after this).
Now, what self respecting mummies home doesn't have a great curse to go along with it? Before allowing the guests into the "pyramid" you need to make sure they are aware of the curse that goes along with it. It's a fun little addition to the theme and a lot of fun to watch their eyes as you tell the tale of the mummy inside and why the tomb is cursed.
If you are still looking for excellent activities you can bury treasure in your sandbox (if you have one) and let them all take turns digging up treasures and/or artifacts that they can take home with them. Make sure everyone has at least one turn and gets one thing to take home from the digging.
You can either barbecue dinner or order pizza or something simple for dinner. I recommend letting the guests eat inside the pyramid for fun (if it isn't too terribly hot) and allow for a showing of The Mummy afterwards (provided the audience is old enough and interested). You could also allow them to play in the tomb for a while or make it an overnight event and allow them to camp in the tomb if it's a tent.
Great goody bag gifts include flashlights, glow sticks, spiders, chocolate coins, stickers, and other candy jewelry. One great game for an Egyptian themed birthday party would be wrap the mummy. Divide the kids into groups of three and have them take turns racing to wrap the mummy (a member of the team) in toilet paper. Do this so that everyone has the opportunity to be wrapped - just be sure to use the cheap brands of toilet paper for this particular project and plan on having plenty in case they get a little overzealous.
Most importantly you want to plan an event that is fun to participate in and that will have all your guests eager to come back for the big birthday bash next year. Just remember you'll be expected to top the current theme and might gain a reputation for throwing the cool parties.