Um, well, preocessed food is nasty, to be sure.  Pet food is even worse.  But dogs eat rotten crap all the time, they don't care what.  Mother cats routinely eat their kittens.  Yeah, it's not something we generally approve of for ourselves but most animals end up eating their own kind at one time or another.  That's just how it is.  I don't necessarily see anything wrong with putting euthanised animal products in pet food, but I can see why some people would object to this and putting it on the label would be a good compromise for an honest businesss.  
On another note, after what amount of processing does animal product just become raw material again?  What I mean is that if you composted dead animals and used the compost to fertilize plants, would you still have to say that animal products went into the production of the vegetables?  In the end it's just organic compounds.