OALD:
re•cycle /'ri:'sa{I}kl/ verb [vn]
1 to treat things that have already been used so that they can be used again: Denmark recycles nearly 85% of its paper. * recycled paper

CALD:
recycled
adjective
having been used before and then processed so that it can form a new product:
This newspaper is made of recycled paper.

Encarta Dictionary:
re·cy·cled [ ree sk'ld ]
adjective
Definition:
1. made from waste: manufactured from used or waste materials that have been reprocessed
2. used again: used again or repeatedly, often at the expense of freshness or originality

re·cy·cling [ ree skling ]
noun
Definition:
1. processing of waste for reuse: the processing of used or waste material so that it can be used again, instead of being wasted
2. saving for reprocessing: the saving or collection of used or waste material for reprocessing

http://en.wikipedia.org/wiki/Paper_recycling
"Paper recycling is the process of recovering waste paper and remaking it into new paper products."

http://de.wikipedia.org/wiki/Papierrecycling
"Als Papierrecycling wird das Sammeln und die Aufbereitung von gebrauchten (gelesenen) Papieren (Altpapier) oder Kartonagen zur Wiederverwertung bezeichnet, die entweder als eine verkaufsfähige Produktklasse oder als Bestandteil normaler Papiere oder Kartonagen in den Handel zurückfließen."

This must be a misunderstanding. Recycling paper is the "ing-form" of to recycle paper: "Das Wiederverwerten von Papier." The result is called recycled paper.