I agree, most cars that get scrapped are perfectly usable. However, you gotta remember, the whole idea is to get older cars off the road. To that extent, the program works as it is designed.
The nice part about the program is it's completely optional. I would never partake, and I'm willing to bet nobody here will, but for many people it makes sense.
For what it's worth, when gas hits $5 again (or higher), that Sentra will look a lot nicer. He's gotten 41mpg out of his first tank, and my best tank is 28 (and that's of premium). Considering my lifetime average is 21mpg, an almost 100% increase is fairly significant.