I had always heard battery experts say that a li-ion cell that reads below 2.0v was toast, just throw it away.
Me and a few others here ended up doing a little experiment where we found that, that statement just is simply not true.
You can read the entire thread or just skip through it. But several of us were seeing what most would have considered a trash it cell voltage and once charged up performed as if they just rolled of the assembly line. I did do a few dated capacity test at the end of that thread. I think the cells health depends more on the number of times its been cycled and how it was cycled with the temperature it has seen also thrown in.
This is the thread FYI - some 'new' Fujitsu laptop batteries
I dont think I have ever seen or heard of a li-ion cell lowering internal resistance from cycling or any other method. As far as I know once its deteriorated its deteriorated.