It was only short-sighted and egotistical if you know nothing about Teddy Roosevelt. The reason he is the greatest President the US has ever known is that he wasn't a party man - he was an idea man with the ability to work within the party system to get good things done.
The reason he went back into the race wasn't totally ego, (although he did have a big problem with Taft personally,) it was more the fact that he saw Taft as a political hack who was letting the bosses back into the ballgame and undoing much of the work he had done in society and in the military.
You have to remember the only reason he became President is because the Republican bosses in NYC didn't want him to be Governor of New York and ruin their fun, so they pushed him as vice-president where they thought he would be forgotten for eight years, except fate intervened.
In many ways, he was more progressive than Republican even when he was in office. Everyone remembers "walk softly and carry a big stick" but giving people a "square deal" was just as important to him.
Busting the powers of the unions, while limiting the abuses of monopolies; attacking corruption and establishing the national park system; protecting America's borders and America's kitchens.
While I thank God every day that we have GW in charge, in many ways its only because I believe he has a lot of the same characteristics as TR. (At least I did until he started pulling all of these LBJ "great society" giveaways out of his bag of tricks.) :(
The problem is that some of his ideas would have devastated our country. For example, he wanted Supreme Court decisions to be voted on by the people. Taft ran such a hard campaign against him because he thought TR was such a danger to the country. Taft had a political tin-ear, but was essentially an honest man.