Worn out Quilts

What do you do with the quilts that you or your family have loved to death? During a visit with my daughter we got to talking about quilts and she asks me if I could take a look at her graduation quilt. She says some of the hearts are falling off and the binding is coming undone. So she brings the quilt into the kitchen and I just about fell over laughing; the quilt is beyond repair. It's been lovingly used to death.
The appliqued hearts are falling or have fallen off. The binding is torn away from the quilt edge on one side and the quilt is very soft and thin. My hand quilting held up pretty good though!

In this picture you can see the torn binding on the left and some of the appliques are completely missing.

Here is a closer view.
My daughter wants me to "fix" the quilt and when I said there really wasn't much I could do and it was probably best to get rid of it she became upset. She said she wished she had never let her family use it. But to me looking at the quilt all I could see was the loving. Her kids would go looking for it to curl up on the couch with or when they weren't feeling well. Of course the more they used it the more it had to be washed and the softer it got. This quilt has had a wonderful life and that makes me happy.
So I told her I would see what I could do and brought it home with me. I think she just couldn't face getting rid of it herself.
What about your worn out quilts? What would you do?