Other villains are equally worthwhile, but Heath Ledger's performance was above and beyond. It's a matter of becoming the role. The best examples I can think of is your standard episode of Saturday Night Live: you can definitely tell which hosts are phoning it in, and which hosts are invested in their roles. It's not "letting loose", its becoming the character.
Ledger also won a Golden Globe and an Oscar for the performance. While the academy was likely giving him a tribute after his death, it's undeniable his acting performance in the role was breathtaking. And IMHO, better than Nicholson.