The old rule of thumb is that if the belting threads are cut, the tire is shot.
I know that it is possible to repair automotive tires with punctures, but I am not sure how effective this is with bicycle tires with higher psi.
If the bike is an around-town machine, use the damaged tire on the rear and ride her until she fails. Otherwise, if you go on distance rides where an unfixable flat would be very inconvenient, then change the tire.
Sadly, most tires retire because of damage rather than because they are ridden thin.
Last edited by mike; 07-08-08 at 06:32 AM.