I'd say go ahead. I made several jean quilts out of old jeans using 6" squares and 1/2" seams. I used bandana or other homespun or warm and friendly fabrics (I've made several) for the backing. Then, I tied them with appropriate colored yard/cotton thread. They are great!!!
A rag quilt would be hard, though--at least all the cutting would be, but I can imagine would look great when finished.