I believe that it could go either way, but most likely people would look at it as biting.

Remember that jay electronica did it on the opening of exhibit a thats jay z verse and XO did d same on d diamond district lp dats called biting no u can pay homage wit yo original material remember

Due to the fact of kats not knowing their history, it's hard to tell. I would like to think that they are paying homage...

Definitely paying homage. The artist spittng the lyric feels good about it, the artist whose lyric is mentioned feels good about it and the listener will interpet it as the artist paying respect. Good all the way around!

Bitting? I think is a bit cruel. To use another artist lyric sometimes can make it sound better or make more sense. Depends...

It could be either or, but most times it is probably biting.