At the conclusion of the student's first training exercise the instructor positioned the helicopter in a hover at about 3 feet agl and allowed the student to use the controls. The aircraft was headed into the 25 knot gusty wind when sudden sink was experienced. The student instinctively applied full aft cyclic control and the heel of the right skid dug into the ground as the helicopter moved backwards. The aircraft rolled onto its right side, destroying the main rotor blades and distorting the cabin area. The instructor had allowed the student to attempt an operation beyond the level of his current ability and had been unable to recover control when the sink was experienced.