Sometimes they rent 'em out to institutions that want that sort of thing. You know, university theaters that host a “movie night” or church groups or whatnot. Back in college, I sat in a projection booth with a friend of mine for several different films (Men In Black, I remember…can’t recall other titles), which were shown free for students. Basically, the films were rented on the cheap after the original theatrical run, when the studios had nothing else to do with them.
Most of the film, I’ll wager, is simply destroyed. After a chunk of film has run through a projector a hundred times, it’s not in the best shape, even assuming it never needed additional splicing or other repairs. There’s really not a practical use for used film, not even as archival copies, since they’d want cleaner film for that. Most collectors aren’t interested in speculating on the future value of current films, and studios don’t have the space to store all that film on the off chance it may become valuable in the future. So, although I don’t know for certain, my money’s on destruction.
Oh, and movie theater projectors don’t really function in a way that you can just “chuck a film in and see what it is.” Unless you’re running something quite modern, most projectors use horizontal reels, about five feet in diameter, which spool out from the center, so you’d need to run the film off its shipping reel onto an empty reel before you could run it through the projector. New movies are shipped on twenty minute reels, six of them for a two hour movie, which are spliced together at the theater into a complete movie. And the projectors don’t have a “rewind” or anything, so once you’ve started a film, you’re committed to running it all the way through, unless you cut and resplice, which is NOT something you want to do casually. When the movie’s run is through, the film is cut back onto the twenty minute reels, repacked into the cans, and shipped back to the distributor.
But yeah, the film is large enough such that viewing individual frames is easy. Of course, it might not be easy to tell what film it is, depending on the frames you can see, and you don’t typically want to unspool hundreds of feet of film looking for a title.