This is an interesting question; it will be interesting to read all the responses.
I take old fabric from garage sales, estate sales, thrift stores and sew them into my quilts. But first I wash them and run the fabric through the dryer. If it doesn't hold up, it doesn't get used - that's my theory. Questions I might ask myself: How much do I value this fabric? In what shape is the fabric? How would I feel if I destroy it? What would I do with this fabric if I don't use it in a quilt?
I will be looking forwad to see what you do....