We can’t interpret the EULA in the forums, because it’s a legal document, and if you want to ask “what would be my possible liability if I did X” then that’s a question a lawyer would be required to answer.
That being said, no, the editor cannot be shipped by you. The UEFN project is shipped by Epic, who obviously have the rights to their own editor code …
If you want a “level editor” for your game, you either build it yourself on top of the Unreal Engine runtime support, or you point your users at the right version of the Unreal Engine download, and ship some plugin and maybe other source content that allows them to set it up themselves. If you want any other arrangement, it is my understanding that you need a custom agreement with Epic, which, again as far as I understand it, requires a six figure (US dollars) royalty pre-payment.