Teir 2 factory does not appear to be recycling intermediates (iron gear wheels, etc). I see in the changelog that this was once a mod setting that was removed - is this a bug or am I doing something wrong?
I've updated the FAQ, since it still referenced the old setting, which I have since removed.
In the current version of the mod (v6.1.18), you should have 4 tiers of recycling machines to unlock; the t4 machine is the only one which can recycle intermediates.
I think by "some intermediates", I mean items that don't allow productivity modules, but may still be in the intermediates tab. I can't remember if there are any of those in vanilla, but I know there should be plenty in other mods. Maybe should clarify though...