I'd personally like to see phones and their parts be usable at some point again after being reported lost/stolen... Maybe something like 16 months after the fact? That way they have a chance at a second life and not just going to landfill. If a thief knows the phone is useless for more than a year it makes it a much less valuable item.
iPhones can have a long life as used devices. And some of the parts are very expensive.
Given the cost of holding inventory is low (parts are relatively small) and even if you’re forced to sit on it for years it could still be worth a fair bit, that may bring the problem back.
I think the only reasonable solution to letting parts back in would be to let Apple mark them as ok if given to Apple for free. Apple could remove the blacklist entry and put them back on the secondary market. But because no one paid Apple anything they would be able to be sure that no one was profiting by turning parts around.
Of course Apple would be making money when they sell those parts. So I’m sure there are some people who would really object to this idea.