how does one know when to replace a rear derailleur? mine still works great but there seems to be a bit of play in it.

If it ain't broke don't fix it.

As mysterious as derailures might seem, there is very little that can go wrong with them;

1) Bent hanger or other components
2) worn springs
3) worn chain guide wheels.
4) Worn pivot joint.

Worn chain guide wheels are easy and cheap to replace.
Worn springs and worn pivot joints are difficult enough to justify buying a new derailure.
Bent derailure components are tricky and not always fix-able; worth a try before tossing, but....

So, anyway, if your derailure is working, keep on using it. The "play" you are experiencing is most often in the shifters and cables rather than in the derailure.

+1. When it stops working and a cable adjustment or cleaning doesn't fix it, replace it. Otherwise, use it.

Most modern deraillers are not meant to last long. Just long enough to get you out of the warranty period - or until the "improved" version is marketed.
I repair old deraillers all the time. Huret used to use BALL BEARINGS in their jockey pulleys. They could be cleaned, greased, and reused. Whenever I come across a butchered Huret, I snag it just for the pulleys. Now that I think about it, I can't rememeber the last time I came across an old steel Huret derailler that was broke beyond repair.

+1 on the Huret's! The old "Svelto" was just about bomb-proof! Lower end Shimano SIS steel derailleurs don't seem to last any time at all, but it's easy to replace them with something better!

Derailleurs are actually some of the more dependable and long lasting components, as long as they are not bent. Shifting problems on modern bikes are usually related to poor adjustments, dirty and/or corroded cables, housings, and shifters.

Al

+2. great advice.

If it doesn't break from an accident, the best indicator is worn pivots. This will cause excess side play and sluggish shifting.