The low prices of oil canges are volume-related. Big chains buying goo quality oil in drums can give you a good deal.
Recycled oil is sold by a number of chains and packaged in quarts or gallons and specifically labeled as "recycled". Many older railroad locomotives use recycled oil as well as some other heavy industrial machinery not requiring complex additive packages.
How good is it? If I had an older US V8 or V6, I would gladly use it, since the demand on the oil would not be severe. Years ago in college, I had a Chevy "stovebolt 6" which had an appetite for oil. I kept a case of 24 quarts in the trunk. At that time it came to $0.29 cents a quart for the recycled oil.
In Germany, oil has to be recycled by law, and 60% actually is. So Germans use a lot of recycled oil. Their processes are probably much more severe though, to get the quality up to the latest standrds.
Back to the mechanic, he is probably deliberately lying or not too bright, as stated. Big chains don't need to use recycled oil to give you a low cost oil change.