I love the tree skirt idea, when i read it i had one of those "why didn't i think of that?" moments. Years ago i made all of our Christmas stockings out of recycled fabric and they are all lined with a pretty dark green satin dress. The skirt we have now isn't so great so that sounds like a perfect idea.
Because of the condition of the dress, i decided i won't be donating it. The seems are so worn out that i thought it wouldn't make it through the night. Giving it to someone to be altered would cost more than getting a newer dress at a consignment shop.