Should Ћ be used for "the"?

Yeah. Well, more generally from the Middle English spelling of “the” that used the version of the thorn character “þ” that was later confused with “y,” not necessarily with the “abbreviated” single-character version of “þe” (strictly speaking, it’s not an abbreviation at all, since it contains both the characters needed to spell “þe/the”). Also there were the (actually abbreviated) versions of “that” ( image ) and “thou” ( image ) in usage.