Is it recycled? I know Toyota tries to collect all its hybrid batteries. On the other hand, I heard that they have not figured out a safe way to recycle the batteries yet. Is this true? If so, then the environmental benefits of driving a hybrid may be less tenable then what we are led to believe.

The battery has a ~$200 sticker on it from what I've heard--meaning if you turn in a salvaged battery, they will give you a bounty of $200 for its return. Recycling of NiMh batteries is a very common thing and is environmentally safe, unlike the old NiCad days which released dangerous cadmium. A little searching around this site and you will find dozens of posts with this question and a lot more information about the recycling.