Chris Johnson has posted with what is probably the better mousetrap for recycle bin functionality in SharePoint. And you don't have to wait until V3 to get it. The guys in MS IT created yet another ISAPI filter that sits in front of the WSS one and intercepts any deletion requests and copies the to-be-deleted-file to a file share. Very slick. You can check out his post here and grab the source, scripts, etc. from the GotDotNet workspace setup for this tool here.
One thing to mention is that the filter will copy files to a file share so you could restore from that. My suggestion for anyone who has too much time on their hands (like us MVPs according to some people) is to have it post the file into another document library. That way you could have end users restore their own documents. With a simple event handler on that library (or a nightly task that runs a small command line app) you could purge the recycle bin library of any documents older than a set date (say 30 days). A little more work, but with a few changes you could get very close to a duplication of V3 and it's recycle bin capabilities (even going so far as to create two libraries, one for end users to restore from and one for admins to). Doesn't take up as much space as the "copy everything" concept and could be quite managable.
P.S. I should have known, but the response for getting in on the beta for my SharePoint Builder tool (what a lame name huh?) was overwhelming (120 requests so far!) so the beta is closed now. Thanks to everyone who's out there to help. You'll be hearing from my email soon.