You must see WED as a tool to fit things together / place things. Besides that, a level build out of blocks is very slow and no fun to build as u can imagine.
Building all in your 3d model tool is one way. Or u buy your assets like i do cause iam no model designer. Because of that i cant advice good Software for building Levels, but iam also interested in.
Always use LOD. There many more things to keep an eye on, but i must sleep for now
till then