Does it stack with Ooze?

Cloak of Flame makes the circle of Fire.  The actual circle, however, is generally secondary to the 20 mps, and +30% attack speed it gives you.  All three things make it a pretty decent artifact pickup for late game (Kills waves of creeps, also makes you deadlier).

Not that I often buy anything from artifact shops other than Rejuv elixirs.

You can use it to warp across lanes because of the independence from the need of buildings or friendly structures. On Crucible if you are lucky you can use that to teleport across to enemy citadel area from the artifacts area. It does require luck since the range is just enough.

It's sort of odd that this item was chosen as #1. I would have chosen Magnus Rod, Universal Gadget, or Totem of Revelation.

Universal Gadget and Totem of Revelation are quite frequently used. Universal Gadget is quite versatile despite being pricy, it can also be used to heal towers. Totem of Revelation are just damn cheap and can be used passively to increase sight range. A must for regulus and as a counter to mine regulus.

The most "under used item" is common sense... then again sense isn't that common to begin with...

Warp stone was at one time one of the best items in the game. However, it has since been nerfed and isn't used much anymore

It's still very helpful for getting out of select situations, such as a wyrmskin UB's slowing attacks.

Huh, I never knew that it is not a consumable (though it should have been obvious). Maybe I'll use that item more often now.

Jumping up behind someone, suprise attacks.

I use the cloak of the night as a favor item, which is basically a warp stone with some mana bonuses. 

I play erebus.

The warp is good for
1.) Teleporting in to close the gap to ranged units that run away (regulus+tb) to get a quick bite (nice because unlike bat swarm it doesn't take mana, so there's no chance of not having enough mana for the bite after the tp)
2.) Teleporting out of bad combat situations (it's not much distance, but creating any kind of distance means the enemy can't hack at you while you run away)
3.) Crossing small gaps on some maps to save time getting back to base or capping flags.

Yes

 At least before 1.1, haven't tried it since because of how much it got me stuck or wouldn't activate.

Warpstone needs 0 cast time and about half the price. Otherwise anyone who wants this ability will just choose Cloak of Night.

Assuming that the only people who want that ability are generals.

I dunno about taking the price down, but definately the cast time. The only time I've ever wanted to waste 5k on it is on crucible, where it actually won me the match.

I think Warpstone should be a consumable.