Is the compiler allowed to recycle freed pointer variables?

Upon an object reaching the end of its lifetime, all pointers to it become indeterminate. This applies to block-scope variables and to malloced memory just the same. The applicable clause is, in C11, 6.2.4:2.

The lifetime of an object is the portion of program execution during which storage is guaranteed to be reserved for it. An object exists, has a constant address, and retains its last-stored value throughout its lifetime. If an object is referred to outside of its lifetime, the behavior is undefined. The value of a pointer becomes indeterminate when the object it points to (or just past) reaches the end of its lifetime.

Using indeterminate memory for anything, including apparently harmless comparison or arithmetic, is undefined behavior (in C90; later standards complicate the matter terribly but compilers continue to treat usage of indeterminate memory as undefined behavior).

As an example, how about the following program printing that p and q are both different and the same? The results of execution with various compilers are shown here.

#include <stdlib.h>
#include <stdio.h>
#include <stdint.h>
#include <inttypes.h>

int main(int argc, char *argv[]) {
  char *p, *q;
  uintptr_t pv, qv;
  {
    char a = 3;
    p = &a;
    pv = (uintptr_t)p;
  }
  {
    char b = 4;
    q = &b;
    qv = (uintptr_t)q;
  }
  printf("Roses are red,\nViolets are blue,\n");
  if (p == q)
    printf ("This poem is lame,\nIt doesn't even rhyme.\n");
  else {
    printf("%p is different from %p\n", (void*)p, (void*)q);
    printf("%"PRIxPTR" is not the same as %"PRIxPTR"\n", pv, qv);
  }
}