The skin is far tougher than its biochemical makeup would suggest, and further investigation demonstrates a subtle repulsive effect that appears to be psionically generated. The fact that the effect is still active, in combination with the slowly continuing metabolic processes in the skin, indicates that the skin is in some sense still alive. Wearing the worm skin as a piece of armor will provide some physical and environmental protection, and will increase the wearer's PSI statistic. However, it will be a continuous psionic drain on the wearer to keep from being attacked and consumed by the skin.
With no Strength requirement, the worm skin can be useful late-game armor for people with a low strength. For the O.S.A. person, it presents a significant dilemma: it makes you more powerful, but is a constant drain on your reserves. Whether that trade-off is worthwhile depends on personal play style (and on how many Psi Hypos you have saved up).