I've got a new post at Lehman's Country Life blog - it's moderated and I'm limited to once a month or less... whenever they want me to write. Anyway, this post is Real Rag Rugs, about making rugs from real rags. Or real rag rugs. Or real rags, made into rugs.
Look over the rest of the site while you're there. There's some good reading (and I'm not just saying that because... well, you know.)
About those rags: I hope you have a rag bag or basket to work from. Rugs, patchwork, cleaning cloths, grease rags or whatever you use them for, don't throw them out. Hem the ones you want to use to clean with and they last a lot longer, besides not leaving ravelings in the washing machine. Heavy or nonabsorbent material makes good grease or workshop rags, but save the "good" stuff to make things from - and not just rugs, though that's a good place to start.
Potholders, patchwork table cloths or curtains or aprons or... or quilts. Placemats, coasters, dresser or table scarves, headscarves...