I'll chime in since I've built large and small zones.

I acknowledge that I have prior experience with a lot of editing tools, so this sort of thing can be a bit easier for me.

Is the tool bad or unusable? Not at all.
If you have been watching my videos, you can see how quickly you can get into the flow of creating levels.

If you want to design places to use in the GM mode, things like terrain editing, npc creation, building creation, decorating and all that are very simple. It shouldn't take you more than a day or two to make a medium-sized zone with proper decorations.

Does the UI need work? Definitely. Right now I think the best word for it without being too harsh is 'clunky'. It can be tricky to get acquainted without tutorials, and even then finding things can be a bit of an issue.
Jumping between the resource manager, and the actual side-bar is a bit of a pain.

It is definitely more complicated than tools like the Neverwinter Nights toolset and Warcraft 3. Someone just looking to churn out mediocre content without putting the effort in will get frustrated at the learning curve.

Now for constructive feedback!
- Work on streamlining your windows for what the user currently needs.
A good example: When I click on a Wall object, I can click the root template to change it to a roof, or another type of wall. No other object types show because they aren't compatible. This is good. You aren't overloading the user with useless information.

A bad example: When I choose the material for my floor or roof, it gives no prompt on what to look for. Only when you press the arrow to assign a material it says 'Choose a material resource'.
So I go to the resource manager and choose TR_Woodpanels.. but it doesn't work but TR isn't a valid type. TR is exclusive to Terrain painting. Why let me choose it?

- Terrain tools are almost perfect. Only things I want are new brush shapes, like square, and a more visual brush size changing. I only figured out to use [ and ] by looking at the hotkeys. Visual feedback is good.

- AI pathing painting is a little odd. Tooltips can clear this up. Tell people what it means when they hover their mouse of Full Generate or similar.

- Object movement, placement, and resizing are wonderful. I actually like your system of doing this more than Neverwinter Nights and Starcraft 2. Well done.

I have to get ready for a meeting, so I'll add more later. Overall, I love the editor! But I can definitely see why people find it a bit daunting or frustrating.