One way to recycle a wine bottle is to turn it into a drinking glass, like the above picture from Instructables. According to this how-to, you score the bottle with a special jig, which cuts a line around it. Then you heat the bottle up and cool it down until it breaks apart. After that, you sand down the edges of the glass with a Dremel.
But if you are going to buy special equipment, I prefer Plastolux’s post on Curbly. He bought an Ephrems Old Time Bottle Cutting Kit on eBay, which does the cutting for you:
These kits are still around. Here’s one for $44. Using that, he made a bunch of cool glasses, including these:
The possibilities here are pretty neat. For one thing, you don’t have to stick to wine bottles. Check out these glasses from soda pop bottles on Etsy:
Or you can use the top of the bottle and make candle holders like these from Green Wine Bottles:
Even Pottery Barn was getting into the game for awhile with these glasses made from Bordeaux bottles (no longer available):
Cutting glass is obviously dangerous, so whatever method you choose, protect yourself with gloves, goggles, and a mask.