The WED level design philosophy is based on the level editors that are used to create levels for old games like Quake, Unreal or Half-Life.

If you invest a lot of time into making levels just with blocks you can still create something nice looking. For example, the youtube channel Custom Gamer reviewed many nice looking Quake maps and talks about the level design in detail for each one. Very informative.

Here is one video:

https://www.youtube.com/watch?v=Qfwblog7iQs

But of course, it still looks dated for modern games. So the best way would be, just like you already said, to create levels in other 3d applications like Blender and import them piece by piece into WED. Depending on your skills in modeling and texturing you can create really beautiful levels this way, no doubt about that.