When Vince bought WcW, he also bought the entire legacy of WCW... So, it doesn't matter that he was never in WWE... He was one of the biggest stars ever in WCW and he should be honored for his contrabutions to the business as a whole...
With that said... I don't want to see him in WWE yet... I mean, I won't lie and say that I wouldn't mark the fuck out to see the lights go out on RAW and everyone to think it's Taker... Then the lightning strikes and Sting is standing (since I know they won't lower him from the cieling) in the middle of the ring pointing a bat at someone...
But, I don't know how WWE would use him... The only real option is Taker at Wrestlemania and of course he would put Taker over... Not sure how good the match would be... They are both up there in age... Not sure if the cool factor of seeing Sting vs Taker would be enough to make up for the lack of in ring quality...
And I believe that Sting doesn't have to wrestle to be inducted... One day, there should be no doubt that Sting will join the Hall of Fame just based on his body of work in WCW and NWA which Vince owns the rights to...
Once Sting is finally retired for good, I'm sure he'll sign a legends deal and do the DVD and Induction and all that...