I cannot imagine a more perfect marriage of my two favorite things! I ran across this post about making yarn from old newspapers the other day...
How cool is that? The results when knitted or crocheted are pretty neat. Follow the link for ideas of what kinds of projects would be good applications of the stuff. They also link to one of their previous posts about making yarn from plastic bags.
The other thing that makes this idea so awesome is that in most paper crafts, you avoid using magazine and newspaper because the quality of the finished paper really declines. So you get so excited about repurposing all of your junk mail, and then you realize 60% of it is still headed for recycle bin. But not anymore! One more step towards zero waste!