Sandy,
The cost of re-refined base oils as I have seen in some plants in Europe, US and Mid-East is not more than Euro 126 per ton. It may vary from region to region based on various factors, such as, govt. subsidies, collection costs, processes, and so on... However, generally there is definitely a sizeable cost benefit to using re-refined base oils versus virgin base stocks of similar group level. The benefits are considerably higher when the re-refiner is also a blender.
Now, on reversing the oxidation of oils... Yes, oxidation breaks down oils and their additives and I am not a chemistry wizard to answer your excellent question, however, this much is known, that all conventional oils contain naturally occuring substances such as sulphur, sulphur compounds, reactive hydrocarbons and other materials, that cannot be completely removed from the petroleum crude and thus end up in the final product. It is mostly these components (substances) that react with oxygen to produce deposits, varnishes, lacquers and other oxidation by-products, which cause the lubricant to deteriorate.
Of course antioxidants are added to control the oxidation or prevent it and these additives get depleted eventually, too. Anyway, to return to your question, re-refining is not about reversing oxidation or reversing the chemistry of the UEO to what it was before it went into the engine... it is about removing the contaminants, depleted additives, combustion acids and deposits, oxidation by-products, wear metals, and any other impurities that can be extracted successfully using physical or chemical processing. It is about conserving energy and resources.
Just as synthetic oils are resistant to oxidation because of their purity, it is the impurities in conventional base oil lubricants that get oxidised. It is these impurities that form oxiddation by-products and get extracted in re-refining.
Good re-refined base stocks like the ones produced at ECOLUBE in Spain are comparable with Group I base stocks. With further processing they could be converted to group II levels.