From a design standpoint, the answer will literally always be “yes”. To the end player, there will literally never be the case where one says, “This game would be better if it didn’t have a level editor.”
You need instead to approach this from a practicality standpoint.
Super Smash Bros. has had an in-game editor since Super Smash Bros. Brawl (or Super Smash Bros. X here in Japan), but that is not what the original developers used to make levels. The engine itself had enough code inside it to handle most of the things you need to create a level, so the tool itself could have been either internal or external.
All of the actual levels were made with external editors, but as I said initially level editors are always a plus, so they wanted to incorporate them into the final product as well.
Thanks to decent planning it was possible. The engine itself was doing most of the work, so to make an in-game editor was nothing but a UI.
On the other end of the spectrum you have Starsiege: Tribes, whose levels have always been created via the in-game editor, even by the developers.
The obvious plus is that the users can make anything your developers could, but you need to have planned ahead for this to actually happen.
Which is better?
To end user, full control is better, but the problem is that the end user isn’t a programmer.
If you dummy things down for the end user you can’t add advanced techniques that make your game shine. In other words, anything you expose to users has to be newbie, and you can’t make a good-looking game if your people need to work with newbie tools.
The final result is that Yes, you always should if possible. The replay value is literally infinite.
But it is a choice that requires thought and planning. And a proper understanding of exactly why people would want an editor in the first place.
Don’t forget that you can have a stand-alone editor for your skilled team and a half-assed editor for your player base, as Super Smash Bros. does.
L. Spiro