Recommendation letters for "good enough" students
I've only been a student, so take this with a grain of salt. 

Be honest to them about their abilities and your perception of them before you write a letter for them. Grad school is not a small commitment. See my answer here also, for an answer to a related question. An excerpt which I feel is very relevant:


  Be very honest. You have information that they don't have that will
  be useful for them. I would rather you tell them what you know and have
  them make the decision for themselves, rather than let them keep doing
  what they're doing and seeing them fail.