honestly i'm not sure that bike is fit to be used as a beater.

I'd remove usable parts-- if it has good tires and tubes then they're probably the most valuable parts on the bike. Keep 'em. The front derailleur might be worth keeping too. Brakes, brake levers, and the 4 control cables with housings might still be good too.

To me, that bike would be "all used up"-- the cost in terms of time and money to make it a usable bike is more than the value of the bike once you've fixed it.

If somebody gave you some food and you used it up you wouldn't feel bad. If somebody gives me a bike and I "use it up," same deal in my opinion.