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Nintendo does not need to counter LBP, because there is nothing in LBP that is new or revolutionary and it doesn't perfect any of the things it does have. It may be a good game, but it will not reach legendary sales figures because it does not appeal to the majority of the market.

The reason why Nintendo does not create level editors is because they are in the games industry and the purpose of a game is to sell copies. The number of people who would seriously use a level editor does not justify the time and effort necessary to create one. Super Mario Galaxy may or may not be a better game, but it will be more profitable than LBP (Sony's development costs are higher and hardware margins lower or negative) and that is all that matters.