THE CFI STATED THAT HE ALLOWED THE STUDENT TO TAKEOFF FROM THE 2,500 FT GRASS RWY. PRIOR TO DEPARTURE THERE WAS A DISAGREEMENT ON THE CORRECT PROCEDURE & THE PLT'S OPERATING HANDBOOK WAS CONSULTED. DURING THE GROUND ROLL ABOUT 1/2 WAY DOWN THE RWY, HE CONSIDERED ABORTING THE TAKEOFF BECAUSE THE ACFT WAS SLOW TO ACCELERATE BUT DID NOT. THE ACFT REMAINED IN GROUND EFFECT & ABOUT 3/4 DOWN THE RWY, HAD NOT ACCELERATED ENOUGH TO CLIMB. WITH INSUFFICIENT RWY REMAINING & OBSTRUCTIONS AHEAD, THE CFI TOOK CONTROL & MANEUVERED THE ACFT ALONG A ROAD WHILE ATTEMPTING TO CLIMB. THE RT WING COLLIDED WITH TREES & THE ACFT THEN CRASHED INTO TREES & CAME TO REST. THE CFI FURTHER STATED THAT THERE WAS NO ENG FAILURE OR MALFUNCTION & WHEN ASKED HOW THIS ACCIDENT COULD HAVE BEEN PREVENTED, HE STATED THAT HE SHOULD NOT HAVE FLOWN INTO THAT AIRSTRIP. ACCORDING TO AN FAA OPS INSPECTOR WHO ARRIVED 5 HOURS LATER, THE GRASS WAS 4 INCHES HIGH & THE RWY WAS SOFT.