Yeah, I can't really fault the choice of Stallone. I don't really know who else you'd pick, to be honest. Stallone may not create believable characters, but he was never afraid to commit himself to a role physically or to play characters that are inherently pretty ridiculous. So really, I'd say that properly done the Judge Dredd role would have played to his strengths, since the core of the character is an uncompromising ideologue who views himself as essential to keeping order in a weak and corrupt society. The setting itself obviously has a lot of elements of parody and satire, but Dredd himself isn't really one for subtlety or much in the way of winks and nods to the audience. Hell, if Dredd could be said to have a sense of humor, you would have to describe it as a grim appreciation for irony and poetic justice. Fitting for a Judge, I guess.
Also, it's pretty sad that Judge Dredd was such a horrible movie that I almost feel like I need to defend Demolition Man now just because of SWM's post.