It only made sense to splinter off a babyface version of the group. nWo was one of the hottest things happening in wrestling. WCW was never able to put together a viable babyface faction to feud with nWo. They tried with the Horseman, but were they ever truly as over as nWo?
What's the biggest heel? nWo. Who's the most over? nWo. The whole thing wrote itself to an extent. WCW had great singles faces like Goldberg and Sting to feud with nWo, but they couldn't and never did create another faction that was as over.
So nWo feuds with nWo. However, the that feud was never really the focal point of WCW in 1998. Most WCW ppvs were headlined by Hogan not feuding with the Wolfpac. Hogan had a few matches with vs DDP and celebrities, and then later it would be Goldberg vs usually not nWo.
The first main event the Wolfpac had after formation was the War Games match at fall brawl, in a losing effort. Their last main event was Nash winning the World title, subsequently leading to the groups downfall.
None of this means it wasn't good, it just was never really the focal point you'd think nWo vs nWo would have been in 1998. They were all possible main event guys working a midcard angle with the potential of being a main event angle. I think that says something about how loaded the WCW roster was during the 90s.
It's interesting to think that the face faction really only existed from May to the end of December in 1998. WCW chose to push DDP and later Goldberg as top faces instead of a new babyface version of nWo. The Wolfpac only existed for about 7 months in its original form, compare that to modern factions like The Shield existing for two years.
Despite the ugliness that was a lot of WCW bookings, this is a classic faction that was extremely over. It had low points, Sting being a part of it made little sense, and Luger is just hard to like (he's a natural heel).
I think Macho absolutely belonged here instead of Hollywood. He was a hard character not to cheer for. Despite this being the nice cool guy nWo, Sting probably should have only been an ally and never a member. Teenage me did mark out when he first showed up in red paint.
Maybe they should have never been called nWo, but then you can't sell those red nWo t-shirts. It made sense financially if it broke a lot of logic. WCW was developing that problem in 1998 (Jay Leno arm bar on Hogan).
This angle could have brought WCW to new heights, but inevitably the Wolfpac were not featured very prominently on PPV and the angle was quickly swept under the rug to revert to a World Champion Hogan leading nWo, and the eventual demise of the company.