What is the most cost efficient way to dispose of Rare items?

Throughout Normal, Nightmare, and now sadly even Hell I have found numerous Rare items that are completely worthless to me. Their stats are not even remotely worth selling on the AH, and they have been replaced by bigger and better things. Assuming I don't want to save them for a potential next character, and I have no other reason to hang on to them. What is the best way to dispose of them to make the most out of them?

Would it be better to sell them to the merchant, break them down for crafting components, or something else? I have not yet found any great advantage to the Blacksmith, but I hear he can be quite profitable by level 10.

The issue here is not whether something will sell, (eventually, many things will), but rather is it worthwhile to keep your stash/bags full of items with mediocre stats, some of which require 2 to 3 AH listings to move?

Right now I believe it's more cost effective to vendor rares, but that may change in patch 1.0.3, in which Blizz has announced that they are "...looking to adjust the Blacksmith costs for training (gold and pages) and crafting from levels 1-59..." In this case I hope "adjusting" means "reducing."

My method for rare item triage has lots of room for improvement, but this is what I've been doing when I encounter a rare:

1. Is it an upgrade for me? If yes, hooray! If not, then,
2. Is it an upgrade for someone in my party? If yes, give it away. If not,
3. Do I have an alt that can use it (sooner than later)? If not,
4. Are the stats amazing? Does the item make you think "boy, I wish I had a [insert class here]"? If so, then list it on the AH for a lot. If not,
5. Does the item have stats that are decent, AND the item has +magic find and/or +gold find? If so, list it on the AH. (I admit I have spent 15000-25000 gold on something 10 levels too low for my "gold accumulation" set.) Finally,
6. If #1-5 don't apply, then vendor it.

All that said, I have trouble following my own advice sometimes. I'm good about vendoring rares with truly horrific stats. It's the items right in the middle I have trouble parting with.

It really depends on how much the materials you would get from salvaging the rare items go for on the Auction House. The commodities market is disabled so I can't check right now, but when I last checked the materials were selling for less than what the rare items sold for, so I was always just vendoring them and when I wanted to craft I would just buy the materials from the Auction House at 1/10th the price of vendoring a rare item.

Also keep in mind that the blacksmith is mostly a gamble mechanic, and you can generally buy much better items from the Auction House for far less than if you kept re-crafting the same items trying to get the stats you wanted by spending both crafting materials and gold.

Obviously this is entirely dependent on the market, but as it currently is it's much more cost-effective to just vendor what you don't want to sell on the Auction House and buy what you want from there.