Dumbest idea ever - it's false economy - it takes more energy/fuel and resources to produce new cars (mine the new material, produce plastics, process everything etc.), even if they recycle cars for the steel, the amount of coal/oil required will be quite large.
Putting performance aside. Age does not always play a role in regards to emissions, eg R34 N/A RB25 NEO engine is an LEV engine with only 1/10 of Japan's emission laws - which i would imagine will be much stricter than here - that's from a 10 year old engine (actually older if you want to trace its roots).
Since there is no more leaded fuel being sold - it would make sense for all older cars pre 1986 to have a high flow cat installed (for the performance inclined) engines well maintained.
A "work around" would be to retrofit a modern engine and environmentally friendly to an older car who's engine is totally beyond repair - only if the owner is willing to pay or the government has some incentive.
However in saying that - I agree bombs/death traps (basically any car not worth repairing) should be taken off the road.
*end rant*