I wouldn't hesitate at all to use it in my compost. If that's what you've got for browns, give it hell! I think most inks these days are soy-based so you
should be pretty safe there. With regards to the glues, I guess my thoughts are that we all use paper. If there are toxic substances in it they are going to go somewhere (either up in the air at the recycling plant or into the groundwater at the dump). If we're all going to use it I like the idea of taking responsibility for it. Sending it elsewhere seems to me to smack of "NIMBYism" (Not In My BackYard).
At any rate, it seems to me that composting whatever stuff is in paper is probably a pretty good way to breakdown most of the gnarly stuff (since compost is so biologically active). If you want to take it a step further, you could work out a system where you grow
mushrooms on the paper first, then transfer it to the compost. Not knowing exactly what's in paper glues, I can't guarantee it would clean it up, but mushrooms seem to be pretty amazing for breaking down petro-chemicals and long poly-carbon chains. Without a scientific study you won't ever really know exactly what's there and what's getting cleaned up (get on it, Academia! We need you!).
With regards to "siphoning off the recycling stream," I think the more we take out of that system the better. Reduce,
reuse, recycle in that order. It may be downcycling, but I think the savings you make in shipping and transport more than make up for that. Up on Orcas I've heard rumor that our recyclables go to one of two places: Eastern Oregon or Haiti. No one wants to work a job separating commingled recyclables in the U.S., so I've heard they get shipped to impoverished places like Haiti for that work. How much energy are we blowing by sending it all the way to the Caribbean?
Good luck!