That was weird - my first attempt to reply was eaten by the system.
Crafting Guides Thread: This thread gives the results of a study of the Salvage Bag's uses, for smiths.
The short version is that you get back one more ingot for each smith item you salvage with the bag, than without it, and it does a "Batch recycle" (everything in one second).
Notes:
1. The formula for what you get back from Recycling smith items is as follows:
Ingots Back = (Mining Skill * 0.66%)*(Ingots used to craft the item normally), +1 if using a Salvage Bag. This is rounded down, ALWAYS. Also note that you have to have the proper mining skill to dig the metal, in order to recycle items made of that metal (in other words, you need at least 65 mining to smelt a dull copper item, even if you are a 120 smith)
To get back 2/3 of the ingots from a smithed item, not counting the +1 from the bag, one needs to have 101.1 mining (high-90s mining, while wearing +3 Studded Leather Mining gloves or the +5 Ringmail Mining gloves - both gloves are low-end BOD rewards)
2. Tailors only get a maximum of 50% back on their junk, at somewhere around GM skill. The bag does not give any extra material back. However, the bag has some other conveniences for tailors.
a. the Bones/Bone piles that have to be cut to be turned into the crafting resource bones, can be cut using the salvage bag - and doing so while overweight will NOT drop the bones to the ground, as cutting the bone piles one at a time while overweight does.
b. Its "All at once" method makes cutting bones, or turning oil cloths into bandages, a very easy action, as opposed to the tedious job it was before. In fact, it makes the old macros for making a single item and immediately recycling it obselete (not to mention the old Recycle bag option of UOA). It is now much, MUCH quicker to make as many of an item you can hold each time (by weight or item count), then use the salvage bag once.
c. The Male armor (leather & studded) pieces oriented with their axis running on the "East/West" line (found only as loot) have long been bugged, and not able to be recycled. The bag will recycle them.
d. Do note that if training with cloth, remove any extra cloth from the bag before you recycle, otherwise that cloth will be turned into bandages.