I have mixed feelings about biodiesel. The plus is that waste oil is being used to fuel something where it would have otherwise been disposed of, so it is reclycling.
Also, burning biodiesel produces 47% less Carbon Dioxide than regular diesel, however it creates 10% more NOx (nitrus oxide) which is what contributes to smog and acid rain. At the same time it eliminates sulfates, drastically reduces particulates, polycyclic aromatic hydrocarbons and much more.
Its not end all answer, but I would say its still better than just throwing out the old oil and burning regular diesel.
Here is a nice fact sheet from Biodiesel.org
http://www.biodiesel.org/pdf_files/fuelfactsheets/emissions.pdf