What are the pros and cons of venting the cyclone outlet outside versus filtering and recirculating the air?
On one hand, venting outside eliminates ALL the fine dust from re-entering the shop environment. No filter can do as well. Venting outside is less expensive to install, as no filtration costs are included. No filter pressure drop also means more CFM at the hood for your horsepower dollar. The best argument for recirculating that the exhaust has to be made up with outside air. If your shop is heated and especially if it is air conditioned then bringing the outside air to room temperature consumes a lot of energy. Also, venting outside can be noisy and if you have neighbors close by they may object to the noise. Finally, venting outside without sufficient makeup air can be VERY DANGEROUS if you have gas fired appliances (such as a water heater or a furnace) in your shop. Sufficient outside air MUST be allowed freely into the shop, or the flue gasses will be drawn into the air. The byproducts of combustion contain CO, which will kill you before you realize what is happening.
