It's going to be some mix of virgin ABS and recycled stuff. The magic is in that mix. But you can't recycle forever, because of the polymer chain degradation. Probably this first run is just virgin ABS, since he'd need to have a bunch of recycled material to start with. But who knows what people are sending back. He'll have no way to manage that. I'd just expect the quality to get crappier and crappier over time.
It's a neat idea. I thought of it too. But when you start looking at it in practical terms, I don't know how you make something of consistently good quality when you are using random failed prints from everyone.
My guess is that he's got tons of raw testing ABS and a bunch of filabots he can't get past QA or safety concerns. I guess it makes sense as a pivot if he's running out of money. But he is waaaay overdue on delivering his original kickstarter.