Also, if they buy your used cd, they don't buy a new cd instead. And if they are non-recyclers, that new cd plus packaging would be going in the landfill. Overall I think it's better to leave the oil you're burning in the ground and add a slight net increase in buried CDs.
I'd guess one cd bought and donated several times and then land filled is better for the environment than 4 or 5 cd's manufactured, watched, and recycled. "Recycled" usually means "downcycled". I don't think your cd becomes a new cd.