I agree wholeheartedly.
I actually use some old suede totes to hold toiletries in my bathroom. You could also donate it to kids playgroup or a local HS theater group as a dress-up prop.
ETA: if you're worried about someone stealing the bag and trying to pass it off as a real bag to someone unsuspecting, you can write "FAKE" several times on the lining. That way, a theater group could use it as a prop (i.e. looks fine on the outside), but there's no way someone won't find out pretty easily that it's a fake.
I purchased a fake Chanel at a thrift store, way before I found the purse forum. It's also been collecting dust. I like the idea of the theatre group and will definately right FAKE inside, so it doesn't end up at a thrift store again someday.