Well, lot's of goodies in this pub. but some things jumped out at me in relation to invalidating the passports. It seems that if the chip is damaged or unreadable because of "wear and tear" the normal passport requirements still stand and are valid for travel. However, if the passport's chip is deemed destroyed on purpose, they will invalidate you:
"...New Ground for Invalidating a Passport
Under the proposed rule, if full payment of all applicable passport
fees is not presented, as for example when a check is returned or a
credit card charge is disputed after delivery of a passport, the
Department, in addition to taking action to collect the delinquent fees
under 22 CFR part 34 and the Federal Claims Collection Act, could also
send the delinquent bearer a letter to the bearer's last available
address notifying him or her that the passport has been invalidated
because the applicable fees have not been received. An invalidated
passport cannot be used for travel. This proposed rule would add unpaid
fees as a ground for invalidating a passport.....
...Damaged, Defective or Otherwise Nonfunctioning Electronic Chip
Section 51.6 of Title 22, Code of Federal Regulations (CFR),
governs the validity of damaged United States passports. This rule
would amend Sec. 51.6 by adding new language providing that a damaged,
defective, or otherwise nonfunctioning electronic chip may be grounds
for invalidating a United States passport. A passport with an intact
data page but a nonfunctioning electronic chip would still be used as a
travel document. However, detected attempts to alter chip data or to
substitute a different electronic chip would result in invalidation."
Anyway, there it is and you can read the whole thing here:
http://a257.g.akamaitech.net/7/257/2422/01...005/05-3080.htm 
