What to do with it?

Can you recycle the down from it and make a simple quilt or something?

Im not sure I would want a quilt from it, its not real high loft stuff (anymore). And maybe beyond wifes capabilities. No idea if it could fluff up better by drying though either.

Maybe there is a way to separate the higher lofting from rest? besides hand picking

I was really thinking smaller, ideas of useful things, like booties, beanies, cozy, maybe a pillow, etc.

Make something for home use, like a comforter.

Or if you're into car camping or non-lightweight backpacking you could make a quilt, a number of recent threads how to do it.

Down booties are certainly a smaller project but I suggest something like scraps from an old ensolite pad or blue foam pad for the soles. I am on my second set of down booties and the sole is definitely the weak spot.

Or a nice pair of overmitts…

The down will fluff up surprisingly in a dryer with a tennis ball (to punch at it). Just use a nice down wash. I use the Nikwax brand products although I've moved mostly to synthetics now due to the climate I live in now. Good luck with your project.

Make a pillow or bed topper? Likely not appropriate for backpacking.

You can also pattern it, and rebuild it. Keep the bag alive in a new body!