I HAVE used one of my PCs as an NPC...but in a very limited way.
One of my favorite characters is a Bard named Mendrill. I created him when I played AD&D, and had to go through all that Fighter, then Thief, then Bard BS. When I imported him into the Realms, I was no longer actually playing him. But...he's made a good mischievous rogue who sometimes hears a valuable piece of information that may be of use to the party, should they happen to cross paths.
Generally, since he's a wandering bard type, I have an approximate area of Faerun that I consider to be his "stomping grounds", and the party has a certain likelihood of meeting him if they stay at some of the better inns or visit some of the more popular taverns along the way.
He's not there to show how powerful he is, or how much "better" he is than the PCs. He's there as a role-playing foil, a bit of timely info, and possibly, once in a rare while, the source of an adventure hook. Why doesn't HE go off on these adventures, if he's so darned powerful? His answer: "I sing about tales of adventure, I don't act in them, thank you very much!"