As it turns out while Hammond and Legion are the two main villains of the movie, Sinestro does have a part in the film and he’s not necessarily evil right away. What they seem to be doing is to a larger degree what Jon Favreau is doing with Mandarin and IRON MAN. What they want to do is slowly build Sinestro as a villain for a future sequel by having him appear in a smaller capacity in the first film.
There’s plenty more to the story as HitFix explains but you’ll have to head over and read it all for yourself. Personally I think it’s great casting and I’m hoping it all works out.