Go out and do the instinct test, see what the trainers tell you, and go from there. I know when we did it we were quite interested in continuing but it was about an hour drive from where I live. To be competitive (there are events/competitions) you really should be doing it at minimum 2 times a week, and I believe the cost out here was $25 a lesson which isn't terrible but also comes out to $200 a month + gas to get out to the farm.
From what I've seen...most dogs have it. Most GSDs can chase sheep around pretty well. I wouldn't trust my boy around small animals, but given time and training he'd probably do alright. For the time being, tug and flirt pole wouldn't hurt anything, like I said, you'll learn on sheep which aren't really "prey" objects in the true sense of the word.
Hopefully people that have done herding will chime in, but depending on your dog's prey drive it shouldn't be difficult to get started. I would love to do herding with my boy, its just wonderful to watch them out there, but sadly I live a bit too far to allow me to be even somewhat competitive.