As a general rule, I much prefer a dev to stick with a game that has proven itself and iterate on the formula as long as humanly possible. I have found that sequels usually don't move the bar that much - the graphics get ramped up to the new standard, but the gameplay is often less than what the original had (especially after years of development). Most sequels strike me as a thinly-veiled excuse to get the playerbase to buy the same game twice. Now, sometimes there is a good reason to do a sequel, especially when dealing with a reputable dev. For example, Paradox's Crusader Kings II is a good example of a dev taking a game to the limit that its engine could handle, and then making a sequel (CK3) that is clearly benefitting from the devs years of experience working on its progenitor (but even here CK3 still lacks features that CK2 had). But with few exceptions like that, I think most good games just get better with years of iteration as opposed to wiping the slate clean and starting over every few years.
As for Elite specifically, I would be against a sequel. To be fair, this is a question that is almost impossible to answer without a deep understanding of the code and any limitations it presents to the developer. I can only speak as a player of the game, which is an extremely limited perspective. Having said that, I just don't see the point of a sequel. EDO has just been released and while it is very much a work-in-progress, FDev pitched the expansion as something of a code-refresh//"New Era!" for the franchise. Putting a period and moving on to a sequel would seem to invalidate all that work (again, assuming the new EDO codebase isn't so borked that it can't be fixed). If EDO can overcome its performance issues - something that might require a switch to Vulcan (NMS had similarly poor performance until HG switched the graphics engine to Vulkan) - I think it will provide a solid foundation to iterate on for years to come.
So,

for a sequel.