I think I would handle the situation with an all-night affair that is sponsored by the school with lots of parental involvement. The kids are locked into the area, and cannot leave until the next morning.
We had an all-night party after graduation when I was in high school. It was separate from prom and much more fun. It was at a huge bowling alley. We had bowling, movies, games, a huge raffle, and lots of other fun activities. It was one of the highlights of my senior year.
My daughter graduated last year, and her school does the same thing. She had a great time, and I'm thankful for the parents who participated in this as chaperones.
As far as her prom, she was with a group that rented a limo and a hotel room, but there were chaperones.