Before and and during the development of Windows 95, Microsoft was being sued by Apple for allegedly having improperly copied the Mac OS GUI.
From http://en.wikipedia.org/wiki/Apple_Computer,_Inc._v._Microsoft_Corp.https://en.wikipedia.org/wiki/Apple_Computer,_Inc._v._Microsoft_Corp:
Apple lost all claims in the Microsoft suit except for the ruling that the trash can icon and folder icons from Hewlett-Packard's NewWave windows application were infringing.
Based on this, I conclude that Microsoft chose the "Recycle Bin" metaphor to avoid, as much as possible, the risk of being accused of infringing on Apple's "Trash".