As thirdsun said, it is the choice of the team, and there are specific rules regarding it's use. It could be slightly different depending on the specific league, though.
The whole problem comes from there being very few pitchers who can hit well-enough to be included in the lineup. Of pitchers with at least 400 career plate appearances the leader in OPS is Wes Ferrell at .797. And it drops off quickly.
By the time you reach that level, pitchers generally are focusing so much on pitching that, even in leagues that demand pitchers bat pitchers tend to hit poorly with very few exceptions.
The goal of the lineup is to get the best balance of hitters and defenders in the lineup at the same time, so if you have a pitcher that can hit well enough to either be better than the player you would hit in their place or allow you to have the extra bench player that would otherwise be DHing, more power to you (no pun intended).
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"Final thought: I just rented Michael Moore's Bowling for Columbine. Frankly, it was the worst sports movie I've ever seen."
--Peter Schmuck, The (Baltimore) Sun
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