The use of her in that episode was very, very well done. Lower Decks is one of TNG's better episodes. (Though one wonders how she graduated and got a commission on the Enterprise before Wesley did.
I've always kind of felt the opposite myself. The first part of Sito's story, about her finding redemption, is indeed very good (especially since she's one of the only two LD crewmembers who will ultimately matter - Ogawa being the other
). But I think the way the mission was handled and that she was apparently killed was poorly done, because it pretty much ruined the development they had going IMO. One could always argue that it proved she had what it took to be a good officer, but I don't see why that would necessitate her sacrifice.
I also found it puzzling that Picard would mention her death to the crew when the mission was classified and presumably would have had strong repercussions for the politics between the Federation and the Cardassians. If she'd survived, it's likely that neither she nor the senior staff would have been able to give a lot of details, so why would they toss the secrecy away when it seemed Sito had been lost? Many real clandestine missions don't work that way.