In the Toronto area (don’t know about other places), there have been light exchange programs where you can bring in 2 strings of old holiday lights (including broken ones) and exchange them for a free string of LED ones. They’re over here for this year, but worth keeping in mind.

Oh, cool! I’ll have to keep that in mind for next year.

It did occur to me that most of the bulbs in the strands are probably just find and can be pulled out and used as replacements in working strands. After that you’re still left with a load of wiring.

The wire could be cut up and used as plant ties and the plug saved as a spare one.

They have a simple tool that allows you to check which bulbs are dead on the string so you only have to replace the burned out bulbs.

Google them with ‘Christmas Light Tester’

Not so much what you can do with broken lights, but how to prevent them from becoming broken:

When you’re ready to store them after the seasons, packing each individual string of lights in it its own (reused plastic) bag. This prevents them tangling up with each other and provides a bit of padding for storage. That way next year you’re not tugging on knots, knocking lights loose and breaking connections.

I could see a styrofoam ball with the bulbs stuck into it all over, like a porcupine, a ribbon to hang it, and boom, christmas ornament.

Well, I like the other comments, but if you get new ones, get LED ones because they use sooooooo much less energy and they last a REALLY long time!

Buy LED bulbs they never go bad.

They can be recycled, if you mail them to:
http://www.holidayleds.com/holidayleds.com_christmas_light_recycling_program

I would rather not to use xmas lights because of the lead, but since you already have those, i would try to fix them using the light tester or else, i would suggest you to make a hanging lamp (like a ball) using vinyl to wrap them and then rolling them. You can tie up the useless cord in the middle and then place the good ones all around. Another suggestion could be to place the good ones in a piece of wood or wire net to simulate a starry sky, then place a dark navy fabric on top, stretch it and make little holes for the lights to show. Place a nativity set below. Hope it helps.

Re Christmas lights - replacement globes can be purchased in small packets… you can take one good light out and individualy replace the globes in the ’section that is not working’ there is generally you will find there is only one globe that has caused the whole section to fail.
Otherwise remove all working globes after testing as above and keep these good globes as spares for your next set.

to use the old christmas lights - get two wire hanging baskets - tie them together so they forma ball, then attached all the lights - pushing the unusuable section inside the basket - use this as a hanging decoration under your verandah.

In the UK and EU you could WEEE them. Take them to your nearest WEEE point and drop them off.