Antz,
Your question shows what happens once you start making decisions for reasons other than ability to help the team win.
You put a guy on the roster who didn't earn the spot. Hooray! Everyone feels wonderful!
Eventually, you put him in a game. After all, it would be cruel to leave him on the bench all season.
Now, to keep the good vibes rippling ever outward, you expect the opposing coach to put aside his aspirations for his team's success and manage the game in a way that doesn't exploit the player's disability? Why should he buy into this project? What if his players have been having a discouraging season and desperately need a win? What if his normal offense is small ball built around the bunt and speed?
What happens when the game is on the line with the tying run on third in the seventh inning? Is he allowed to bunt then and still meet your standards of compassion?
What about stealing? It's possible that this pitcher isn't great at holding runners. Is it okay to get a good jump on him, or would that be selfish, too?
Where would the accommodations stop? When would it be okay to play to win against this player? When do the other players on either team get to learn the lessons that come from striving to reach a common goal?
Sportsmanship is about playing hard within a set of rules. I maintain that it is poor sportsmanship to put players and coaches in a situation where they're expected to compete half-heartedly.
Remember, this is varsity competition. There are other baseball venues with minimum participation requirement for players looking for a more relaxed baseball experience.
The cross country story is nice, but it's a different kind of situation. In cross country, each team fields 7 runners, but only the scores of the first 5 finishers count. A non-competitive runner who finishes last doesn't hurt the team's chance of winning.