While I get your point (that interpretation did not occur to me) would you use "many" as a pronoun in that situation? To me, it does not seem to fit,
As you've seen from the previous answers, your sentence is potentially ambiguous.Is it correct?
"Many are used to do it."
Actually, there is no ambiguity. The full infinitive after 'used ' in #1 tells us that this is the past simple (passive) of 'use'. The -ing form after 'used to' tells us that this is a 'used to form'. In speech the difference is even clearer - 'used' is pronounce /ju:zd/ in #1 and /ju:st/ in #1.