I don't ever remember seeing "recylced" though I have seen ".trashes". If you throw items in the trash and don't empty the trash, the files will continue to take up space until you empty the trash (otherwise, how would you ever be able to recover something you've thrown away ?)
Also, before panther, my externals would sometimes not release this space until I'd unmounted and remounted the drive. Try that and see if your space is recovered.