ITV is a commercial channel and relies upon content to gain commercial interest. If ITV is forced to 'up it's game' due to competition, this is good for the consumer and good for ITV who can charge more for prime time slots.
If the BBC was forced to show it's best shows at other times, the consumer would still watch those shows and the programming on ITV - which would be non-prime time - would be of no interest to the consumers and sponsors would not be interested in placing commercials.
In the absence of competition neither ITV nor the BBC would go the extra mile to create content which the public crave. This cannot be a good thing.
As for constraining the BBC to educational and documentary programming - this would make it even easier for ITV to produce content that was 'good enough' rather than great.
Eventually, there would be outcry for ITV that the BBC was unfairly capitalising upon educational or documentary programming thus children and Slashdot readers would be watching basic arithmetic and Large Hadron Collider content at midnight.
In the words of Isaac Newton: "Leave it the fuck alone" (out of context as the BBC was extant at that stage)