Did some Googling to confirm that used soap is not, repeat not, recycled.
However, I did find this amusing story about the La Crosse, WI Kiwanis club:
Local group recycling unused motel soap
Dennis inspects each bar. He scrapes makeup, hair and gunk off with a knife, and tosses soap that’s too dirty to clean.
He then puts the soap through a meat grinder.
Gina adds the powdered soap to water in an electric roaster to both kill bacteria and melt the mix until it becomes goo the consistency of mashed potatoes.
The soap cools overnight in wooden molds, and the next day a hardened square is sliced into 18 bars, which dries on chicken wire.
Yuk! Bars are
not distributed in the U.S. where it would presumably be illegal, but sent to third-world countries.