Well, although he is a canon character, him being mentione din the movie doesn't make him that. The movie is filled with non-canon information. Anyway, I would guess that it might be because Shang Tsung is still in possession of Kung Lao's soul. But if this was the reasoning, then Liu Kang would probably be either a soldier or bodyguard of The Dragon King, since Shang Tsung took his soul as well.

I would say Midway just wanted to see everyone's favourite Bruce Lee model return to the series in a big way.

I've made a thread on this a long time ago. Seems most people on here don't like the idea, but I do...

I think he would be a really cool hidden fighter, and should be a really skilled fighter too. He should be a hidden, and you get to fight him by doing 'something'. He would be REALLY hard to beat, fast, powerful etc, and if you beat him, you unlock him...

Hey, maybe since the DK is so powerful, the earthrealm will need all the help it can get. The elder god's sent Shujinko, their champion. Liu Kang seems to have been resurrected to help, perhaps by the elders. Why not resurrect the Great Kung Lao as well, get all the former Mortal Kombat champions to fight the Dragon King.

Even if he's not playable, Shujinko should meet him (and hopefully learn from him) in Konquest.
So we probably will see him in Deception at some point.

The original Kung Lao shouldn't come back. We'd have another lame ressurection on our hands unless they go the route of a rebirth. I don't think it should be done. Mortal Kombat is supposed to spawn new champions of Earth realm, not old ones coming back from the dead.