Well, in the final analysis, this makes the most sense to me.
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No. Don't encourage gun buybacks (hell the name even pisses me off ... they're not buying anything "back" ... more crap born of the thinking that government owns everything and we are all "distributed" our "pieces of the pie")
Selling non-functional guns is exactly what that program deserves.
Send it to Numrich's. They'll send you a check for what they think it is worth and reimburse you for the cost to ship it to them (parcel post rates). I'm doing that with a Rem Model 7 260 Rem barrel I've been trying to sell here
Except that it doesn't hurt the program, it only justifies the programs existence and encourages them to keep doing them. Remember the goal of these things is not to get dangerous guns out of the hands of criminals, its to get poor people to volunteer to disarm themselves and prostrate themselves before the all mighty State and reinforce the notion that only The State should have arms.