Here are just a few challenges and solutions:

• How to get the bag from your hand into the cylinder. Bag is fed into rollers and is then wrapped tightly around a pin. The pin and bag go into the cylinder and the pin is pulled out. See the project log coming very soon for more details.
• How to heat the plastic. The tube is heated either by induction or a resistive element. It needs to get to about 180C. The bag doesn't have a lot of mass, so it should melt quickly and won't require too much energy.
• Bags are not all the same size. If the bag is too big, excess plastic goes out the side of the mold and is cut off. If it is too small, the disc will not be complete. The entertainment device has to be able to handle irregular discs.
• Sometimes there is stuff in the bag. The rollers should be rigid and tight enough that no solid chunks of stuff can get in. The injection nozzle should be large enough that things can't clog it. The result should be assumed to contain impurities.
• What about different kinds of plastic? It will have to be up to the user to determine if their bag is PE or something else. Signs, examples, and people who know the difference could help here.
• This is a whole lot more expensive than a simple bin and it will require maintenance. Well, yes. But that bin isn't doing the job. Plus, if this is located at a store it might attract customers. You could even put it in the entrance of a toy store. That's something people will pay for.

Of course this list will grow substantially as I develop the concept further. Let me know if you think of any more potential problems or have any advice.