Malaika, we think this is a great opportunity to recycle or donate the knives - perhaps to a friend who is just setting up her kitchen, or to a thrift store charity. We assume they're steel, and not stainless steel (from the rusting) - so why not scrub them down and have them sharpened? If they are sharpened and clean, they would make a good donation item, and it would keep them out of the landfill a little longer!
If they are in really bad shape, though - totally unusable - we would wrap them securely in several layers of newspaper and trash bags (to keep any sharp edges from poking through) and pitch them.
Any other thoughts on recycling or donating?