I think that any blockchain ecosystem needs the ability to create smart contracts (think DeFi). Hive-Engine in it's current form is not robust since it's basically a centralized token issuance entity.
Having said that, it is my belief that implementing atomic swaps at the core level is more important than second layer solutions.
Deploying a smart contract platform is a big deal (even on a second layer). You have to decide how to handle buggy code beforehand (you don't want an Ethereum DAO like incident) and so much other stuff to think about.
Agree, I've worked on the "decentralization" process for Hive-Engine, they just haven't deployed it yet (although in its current form, anyone can run a Hive-Engine node, there's just no incentive to do so, only SCOT and STEEM/HIVE pegged tokens are fully centralized).
But yes, I'd rather have atomic swaps fully integrated in the Hive core software as well. (and a second layer engine could be used for other "types of tokens" that Hive will never handle directly. (NFTs for example))