This is, apparently, all permitted by a recent rethink by the church, although there were some restrictions:
When the ecclesiastical ministry changed the law to allow such recycling in 2005, it barred the reuse of such spare parts in works of art.While I don't necessarily disagree, I'm a bit intrigued by the reasoning, as well as the blanket prohibition. Why not merely prohibit the sale of work containing re-used human remains instead of barring their creation as a whole? Is art as a whole so obscene?
(On the other hand, some awkward questions might arise when little Bitsy wants you to put her collage on the fridge...)