Yeah, when I initially posted about this mod to reddit, they were quick to show how it could be abused. There's really no good way to stop it, aside from either drastically increasing the power consumption or crafting time, or by reducing the amount of items returned, like you mentioned. I also wouldn't really want to do either... I only ever imagined this to be used on burner mining drills and pistols and armor and such.
But yeah, I don't think I'll be fixing it either way. If a person cares that much about the potential for exploitation, then they should probably check out the other recycling mod, as that has some "mod mods" that reduce the amount of material you get by various increments (10%, 50%, etc). Of course, that one is an assembling machine instead of a furnace, so you have to set specific recipes, and can't just dump anything into it.
Maybe I could set a config option for it... off by default, of course... if people really care about it.