I farm everything, and as of now I am pretty sure that salvaging is an awful waste of time AND money.
I think that one in 5 rares can be sold for at least 100k, that alone makes salvaging a great way to throw money. Picking up blues can really make your farming sesions take longer and have less benefits.
What it really depends on is how much time you have to spend on things, and how FAST you want to accomplish certain goals.
For one thing, most of the characters I use are using ONLY self-found gear...so right there, you want to talk about waste of time? I'm not getting to MP10 or killing ubers solo nearly as fast as half the people on this forum. Because I'm doing it myself, the hard way. The way Diablo 2 fans would be playing Diablo 2 right now, quite frankly, because that game doesn't have an AH.
I bought Diablo 3 with the complete assumption that I'd be playing it for over 1000+ hours. You say it's a waste of money because salvaging could destroy an item that could go for 100k? Believe me, I know. I miraculously sold a 600 DPS, LOH, IAS dagger w/socket for about 600k on Auction the other day. Guess what. What do I need hundreds of millions/billions of gold for, if I'm not buying every piece of gear I wear?
Most of my money, aside from incredibly lowballed Auctions, is from vending. I go out and farm, I pick up a heap of blues and yellows. I vend all the blues (which, in Inferno, can actually net me a decent amount if I don't die...10 at 1k each, that's 10 grand). Then I split the yellows in half, salvage the lower priced and vend the higher priced to guarantee myself more rare materials. Does it take a while to max my materials? Sure, but that's the point...I'm not in a rush.
You say it's a waste of time, but again, I bought this game because I wanted a game to put 1000+ hours into. Most people bought a game to put 1000+ hours into, they go buy all the amazing gear (they should be finding) on the AH, and then cry because they're not finding good upgrades out in the world. Uh, well, derp? What did you think was going to happen? You were going to buy epic gear in the AH and then just find something else amazing out in the field? Damn near impossible. Me? I use pretty much all self-found gear (aside from my Wizard), and I find either upgrades or close to it practically all the time. Imagine that.
@Cardinal, you're an idiot. I'm not talking about making money, but everything has relative value. In order for this to be useful it has to be at LEAST equivalent to spending that gold on the AH. Saying "I never buy materials so they don't cost me anything" is absolutely idiotic since if you're using them, you NOT selling them. So they either cost you gold to buy or cost you gold that you didn't get by selling.
As for the OP's post here, keep in mind one thing...the way this game is designed, you can have hundreds and hundreds and hundreds of gear pieces in one single session. Vexorian over there saying even PICKING UP blues is a waste of time AND money. But I don't see it that way. If something drops for me, after killing monsters, that's something I can use. Vexorian sees picking up blues as wasteful, because you can sell ONE rare on Auction for 100k and just buy the materials you need. When fact is, if I invest the time (which I've already said, I'm plenty willing to do), if I have a ton of blues I don't need, I can get the 100k AND materials AND I don't have to spend anything.
You say at the end, Zoid, that those items I salvage either cost me the gold to buy them or the gold I would get from selling, but that's kinda the nice thing about the RNG. I see some item with average to below average rolls, I'm fine with salvaging it. Because rolls like that are pretty likely to come up again, either on a piece for the same gear slot, or something like it. I look at everything I pick up, and while some people may see that as a waste of time, since I use only self-found gear on any characters other than my Wizard, I find upgrades pretty often.
Obviously, buying all your stuff from the AH means just about everything that drops is either vendor trash or Auction worthy. Me? I like building my characters from the ground up, not customizing every single thing via the AH, which really just leads you to the same gear sets that every other class has. Check peoples' profiles. It's madness seeing the same legs, the same sets, in the exact same places. It's all cookie cutter.
My self-found geared characters are making it to MP10 without the help of the AH, and it may take me another year, another two. I've been playing Diablo 1 since high school...trust me...I've got plenty of time. Only thing that'll stop me is Blizzard shutting the servers down, and I highly doubt that's happening any time soon.