The Garda auction tends to be for bikes that were stolen and recovered rather than bikes that were freed from their forgotten places, afaik. Any bike that would be sufficiently damaged to warrant being cut from a bike rack probably wouldn't interest anyone except a bike shop owner who'd buy a job-lot for parts (which does happen, but infrequently).
The other day I saw some DCC workers with a large wheelbarrow full of 6 or 8 damages bikes, but I couldn't stop to ask them where they'd come from or why they'd decided to remove them. I presume there's a process for monitoring damaged bikes, otherwise there'd be a danger that a bike that had had its wheels kicked in over a weekend (a very common occurrence) could disappear before the owner had had chance to arrange for its repair. I do remember one case where a sign was attached to a bike rack on Dame Street saying that any bikes left there a week later would be removed. It never came to pass, possibly because someone in DCC realised (or had it pointed out to them) that it's not unlikely a person would lock their bike in town for a week or more and go on holidays. (Not to be recommended, it's true, but there's no law against it.)
Just on the number plates thing: Cyclists have a hard enough time making sure their bikes aren't damages in the normal course of events. Putting a number plate on the bike would seem to be just another thing for the local head-the-balls to try to break off. Everything that's not welded on to a bike seems to be fair game for the little gurriers who believe that if it's not nailed down then you mustn't care about it. I had a conversation with a kid (certainly under 10 years old) outside the recent Bike Festival during which he was telling me quite frankly about all the stuff he nicks with his mates- lights, reflectors, bells, etc. Strangely, he didn't see anything wrong with this.
Edit: If you want to see some tragic bike wrecks, go to http://www.seanhillen.com
(I linked it in a previous post) and look for his bicykills project. He had a big wall of them - 100 or more photos - at the bike festival and it made for very sad reading.