What problem does this address?

Currently it's not possible for users to edit the contents of a Page List block inside the Navigation Block List View, using drag and drop, or any other mechanism:

It would be good to allow users to make edits here, but we need to consider what the impact of that should be.

What is your proposed solution?

When users try to edit the items inside Page List we should allow them to do so, but first convert the list to a navigation menu, so that it's clear that they aren't editing their pages anymore but are now just editing a static list.