His strength was always in player development and coaching. Which was why he was so well liked as a youth coach and technical director if memory serves me right.
As you said, he wasn't a tactical imbecile but it was his weak point. Maybe combined with a bit of his ego getting ahead of him once he was head coach. If he is able to grow around/above that there is no reason that he cannot become a decent manager. And even if he can't he could still carve out a good career as an assistant/coach.
If he wanted to come back and work with our kids again to create a new Kane, Mason, Bentaleb, Andros generation then why not?
I think he and Chris Ramsey made an excellent pairing - Ramsey I think was the football/coaching brains whilst Sherwood was very good at dealing with both kids (as a PL footballer who had played fir England an excellent role model) and parents and other coaches to arrange loans at the clubs.