I use food boxes in my packaging all the time — including McDonald's happy meal boxes. I use them and cereal boxes, as well as other packaged food boxes that use cereal box style cardboard (as long as the food is dry) - even soda pop cardboard. I flatten them, then cut 2 pieces exactly to fit inside the envelopes I use to ship my cards. I put the cards in between the two pieces then inside the envelope. The envelopes are 100% recycled paper - Kraft paper - that I buy from envelopemall.com.
When I'm not shipping something that is flat, I re-use the smallest cardboard box I can find to do the job — or a bubble mailer that I re-use. Sometimes I reinforce those with cereal box cardboard.
I have never had any complaints - in fact - I have received some really nice compliments about my packaging. I think people who buy the things I make are eco-friendly to begin with so they appreciate it. I do put a statement in my etsy seller's profile that I use re-used packaging, but I don't go into detail.
I really don't take to heart the concern some express about needing to have frilly packaging or making things look 'professional.' The vast majority of people when asked say they think what really matters is the content and they don't care what the packaging looks like as long as the item arrives safely.
That doesn't stop me from wrapping a monkey figure or a handmade box in tissue paper or raffia ribbon though! When I do make an effort to wrap a purchase like a present, I always re-use material — usually from Christmas and birthdays. Fortunately the vast majority of people who buy presents for me use non-Christmassy wrapping paper and tissue which makes it easier to re-use.
I also use butcher paper to wrap packages - you can get it from your local newspaper for cheap or even free. At some point, the paper on the huge rolls they buy is too short to run through their press, so they accumulate 'end rolls' of unprinted newspaper. You can call them and ask if they give away or sell their end rolls. Crumpled, it makes nice padding for items that aren't heavy. You can also buy rolls of Kraft paper to serve the same purpose. It's also inexpensive.
For heavy items like pottery, you still need bubble wrap or those plastic peanuts - I save all of that type of thing I get so I can re-use it. I've never had to buy them since they are so ubiquitous.
Basically, if you save all packaging material you receive, you can re-use almost all of it. The only things I throw straight in the recycling bin are materials that are soiled, stained beyond all recognition, or crushed to the point of being useless. For re-sued packaging materials like boxes and bubble mailers that have been around the block and don't look pretty, I wrap them in Kraft paper off a roll.