It is okay to send out the cards in the way you have described so long as the cards are not active. Providing activation details, such as a call-in number from the home phone, is sufficient since once the consumer calls in, they are in essense requesting the card to be activated (the sending of the unactivated card is really nothing more than advertising).
You cannot force them to take the card, but you are not required to issue an ATM card either. I'd recommend your bank examine the customer impact for consumers that choose not to activate the MasterCard debit card but now will be without an ATM card.
My opinions do not necessarily reflect those of all the voices in my head.