I have a 10GB Hard disk on my A1200 that is totally trashed from about 7.6GB onwards but the first 7.5GB is fine (i allow a margin for safety). I just set the RDB on the drive in HDToolbox to 7250 cylinders instead of 9765 so it doesn't consider the damaged upper part of the drive to be part of the drive surface.
If you can figure out if the bad blocks are in a cluster or spread out you might be able to use some of the disk, but I don't advise it. If the bad blocks are occurring spontaneously on the drive ditch it fast.
I only continue to use mine becuase the damage was caused by the computer it was attached to, not the drive itself degrading.
