I could see myself grinding up the dark meat and make sausage with bacon
. I don't really care for the breasts. But I would just skin the birds, lop off the thigh and leg for grinding and throw the carcass with breast on in a bag for making stock. I do A LOT of stock. I use the heck out of it.
As for meeting state laws, I would be selling live animals. If I get into butchering I have to pour a foundation somewhere and cover with a greenhouse to make my own processing plant. Not there at this point.
When we skin birds we compost the feathers for use in our fields. We are really focusing on a biodynamic approach to our farm and the chickens are a part of that. They till fields to be planted, eating weed seeds and fertilize. We sell their eggs, eat their meat, and compost their feathers. Circle of life around here!