I'm going to take your 2 questions in reverse order.
Perhaps there should be a way to gently tell the editor to post the edits as a new answer. As far as I can tell the current interface doesn't allow that though. Comments?
Sure there is, you can leave them a comment to this effect. Comments & the chat room (to a lesser degree) are the 2 tools at your disposal for this purpose.
Some suggested edits are substantial improvements to the original answers, to the point of being better answers by themselves. .....
This really comes down to, are you the type of person that's in it for the reputation points or are you more interesting in getting information out that will help the community.
I can attest to having taken very weak answers, and have completely overhauled them to the point that they're 90% me and 10% someone else. My rationale is that it's more critical to keep questions clean so that there's a few answers, rather than many answers that all provide pieces to a solution.
NOTE: How many times have you gone onto StackOverflow and had to read through 10+ answers to figure out what to do? Yeah I hate that too 8-)
But as you've mentioned, you're now venturing into the realm of making the answer something that the author may not have wanted. So I tend to deal with this situation in a few ways.
If it's a new user to the site, I'll opt to provide much more detail to their answer. NOTE: This has the side effect of showing the new answerer what we expect on this site in terms of effort when providing an answer.
If it's a senior member to the site, I'll ask them if they'd mind if I further expand their answer first, before doing it.
If there's a few answers already to a question, I'll edit an existing answer that's lacking in details, rather than add a 5th+ answer to a question.
If there is only 1-2 weak answers, and none of them really show the intent of what I want to provide as an answer, I'll add that 3rd answer as my own.
The above is all fine when it's your material. However if you're reviewing someone else's edit, then things get even more complicated. One other trick we have up our sleeve here, is that moderators can actually merge answers in extreme cases. So you could reject the edit, and leave it up to a moderator to clean up.
But I'd hesitate to do this, since it's cumbersome from a reviewers standpoint, since you either have to reject the edit, get the author to post it as their own answer, and then flag them so a moderator can merge them instead.
So for these situations, there's really no 1 rule that fits all. Hence why we have humans in the loop, performing the reviews, for suggested edits.
As a final note, when a user gets to a 2000 rep, they no longer have to have their edits reviewed. So anyone that's gained that much trust within the site, can edit, without any such review. This last bit, IMO, really emphasizes the point that the Stack Exchange engine really wants people to edit and improve existing answers, rather than add their own.
Hopefully this helps answer your question(s).