You can't have the face of the company, Sting, come back in a storyline all about returning to avenge WCW and then have him lose. That would be stupid.
It depends on who you think has more longevity, Sting or the nWo. I think the nWo still had some juice to it in '97, so going over Sting was the right call. Especially when the whole angle with the nWo was them winning more than losing.