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Usually I would say there is nothing to be lost by applying. Just attempting to prepare the application - responding to the key job criteria - can be a useful experience. That may help you decide whether you have a good application to submit. If you then go forward, getting to a shortlist and going through interview can also be useful. If you have the attitude that it's no problem if you don't get the job, you will probably find it all a benefit. Challenge comes if you are offered the position - then you have to consider the outcome if you decline. You still have to work with the interview panel that offered you the job and you declined their offer.
I said "usually" because something very similar happened for me two years ago and I didn't apply. Probably driven by my view that I only have another five or so years to full or partial retirement so why do I need more managerial worries in my life?
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