I deal with my scraps by deciding that anything fat quarter or larger sized doesn't count as a scrap so that gets put back with yardage or fat quarters. Anything smaller than a fat quarter that is an irregular shape gets cut into the largest sized "precut" I can get out of it. I have a drawer unit that I store my precuts in.
Anything smaller than 2" gets used in string quilts or crumb quilts. I have a shoebox that holds those and when it gets to the point that the lid doesn't shut then I pull them out and spend time just sewing them together. That's also a fun thing to do when I feel like doing some "mindless" sewing.
Since I'm one of those folks who likes to have multiple projects going at once I usually have a crumb quilt, string quilt, scrappy quilt and/or improvisational quilt going at the same time that I'm working on something more structured. I also use scraps to make test blocks... My test blocks get stored with orphan blocks which usually end up getting used on quilt backs, or put together as a sampler quilt---all of which means that I manage to stay in control of my scrap heap, but seem to always have a huge number of UFOs.....
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