The Torah tells us that when our mother, Sara, died Avraham refused to bury her in the general municipal cemetery. He insisted on designating a separate location as kever yisroel. Why have the Jews insisted throughout the ages on maintaining a separate cemetery?
The halachah divides all religious articles used to fulfill mitzvot into two categories: tefillin, mezuzah, and sifrei Torah, are labeled as "tashmishei kedushah"; as opposed to lulav, a shofar, an etrog, and schach of a sukkah, which are labeled as, "tashmishei mitzvah". The practical difference between the two categories is the following: an old pair of tefillin, or an old sefer Torah or mezuzah, which can no longer serve as the object of a mitzvah, may not be discarded but must be placed in the sheimot and buried in a dignified fashion. An old lulav or shofar which one no longer plans to use for mitzvah purposes loses its status as "huktzah limitzvato" and need not be placed in the sheimos and may be discarded. The sanctity which descends upon "tashmishei mitzvah" which is derived from the fact that "chal shem shamayim al hasukkah" (Beitzah 30b) is only temporary in nature, and vanishes into thin air as soon as the object is no longer set aside for use in the performance of a mitzvah.
How did the Rabbis know how to determine which religious articles belonged to which category? R. Chaim of Volozhin explains in his work, "Nefesh Hachayim", that the source of all permanent kedushah is the Torah. tefillin, mezuzah and sefer Torah, which all contain passages from the Torah are considered as tashmishei kedushah. Even the bayit of the shel rosh which only has the letter shin on it, also qualifies as tashmishei kedushah. One word , even one letter of Torah has the significance of Torah. The sukkah, the etrog, and the tzitzit, however have no Torah confined within them, and therefore can not qualify as tashmishei kedushah.
The human body is always involved in the performance of mitzvot while one is alive. The fact that all men have the tzelem elokim would certainly more than sufficient to require that we respect each other. But after one dies, and the tzelem elokim is no longer there, and the body is no longer performing mitzvot there should no longer be any requirement to respect the dead body. Here the halachah of tashmishei kedushah becomes relevant. The Jewish body, which was involved with Torah acquires the status of tashmishei kedushah and may not simply be discarded after death. And even those Jews who never learned a word, or even a letter of Torah during their lifetime, according to the talmudic tradition (Niddah 30b) had already been involved in Torah study before they were born. Hence, the Jewish dead must be buried with dignity, in a separate Jewish cemetery.
If one placed an old lulav or an old shofar into the sheimos this would be disrespectful to the tashmishei kedushah which are found there. It is the study of Torah which endows the Jew with the kedushat yisroel.