I think it's ridiculous, but I don't have any problems finding secondary uses for paper or plastic bags. (Another situation where the small business owner should decide, not the government, IMO.)
On a related and opposite note: I think the Cincinnati area sucks at recycling. They don't make it very easy and it costs more to do it. (That may be state wide. I wasn't sure.)
New York does a much better job. We used to separate, wash and break down everything. It didn't cost more. We had bins that went out with our trash. They would not pick up your trash if there were things in there that should be recycled. You just got used to doing it, and felt good about doing it.
It's bizarre to me to throw a soda can away. We used to take them the the Blue Ash recycling center but it just wasn't convenient to do all the time.