Meliodas is one of the most divided characters in the Seven Deadly Sins anime. Few can acclaim such a polarizing shift in personality; even Hendrickson's evil in the first arc can be explained through his possession by Fraudrin.
Before the Sin of Wrath are two paths. The first is that of the captain, a trajectory he has been familiar with for a number of years. However, an encounter with Melascula has awakened the darkness inside of him, and he has endured a rebirth as the son of the Demon King. This contrast elicits an essential question: which Meliodas would be better for the story?
10 Demon King - Elizabeth's Cycle
An unfortunate truth about Meliodas's ascension to Demon King is that it is fundamentally correct. Without obtaining the power of the Ten Commandments and realizing his father's dream, his beloved Elizabeth is destined to die three days or less after she recovers her memories.
This has been a cycle that repeated itself over a hundred times, one which has weighed against Meliodas's conscience with every reincarnation. He cannot simply kill himself to avoid it, nor spurn her affections ~ both are guaranteed conditions of the spell placed by the Demon King and Supreme Deity.
9 Captain - No One Else
One fact which necessitates that Meliodas stay the Captain of the Sins is that there is no one else to lead them. Ban is too fixated on Elaine, King is too sensitive, Diane doesn't have leadership skills, Escanor is too unreliable (on account of his condition), Gowther is too inexperienced, and Merlin is not nearly charismatic enough.
The latter has served as the ersatz replacement in the Wrath Sin's absence, though with little to show for it. Were it not for Meliodas's awakening, Chandler would have massacred the entire team. Merlin may be intelligent, but she's a better supporter than a leader.
8 Demon King - Strength
Meliodas's insane power level warrants him the most imbalanced character of the Sins. He is capable of killing a Commandment in a single blow, as seen through the way he disintegrated Fraudrin.
This entails that the only way to keep fights interesting is for his opponents to gradually progress in power, forcing the other Sins to subsequently become stronger as not to be obliterated. It would be much easier to delegate Meliodas as Demon King instead to avoid these narrative issues.
7 Captain - Proving Ludociel Wrong
The leader of the Four Archangels, Ludociel has come to save humanity from the clutches of the Ten Commandments, though more importantly, to exterminate the demons. Superficially, this may seem like a noble objective, but some demons have proven themselves not to be as incorrigible as many of their brethren.
Examples include Monspiet and Derieri saving a human woman's soul from being devoured by Estarossa. Should Meliodas become the Demon King, this would essentially prove Ludociel right. Given that he's advocating for genocide, this may not convey an appropriate narrative message.
6 Demon King - Narrative Subversion
In many anime, it's expected that the hero will prevail in their goals, with their foes either imprisoned or destroyed. Seven Deadly Sins is an effective series in the regard that its moral lines are not always clear, especially in the most recent season.
If Meliodas becomes the Demon King, it would not only subvert the expectation that he will be reunited with Elizabeth in the end, thereby increasing the intrigue of the story, it will force us to realize that not all relationships have happy endings, so we shouldn't take the successful ones (such as Ban and Elaine's) for granted.
5 Captain - Avoiding Redundancy
In the first season, a demon controlled Hendrickson would turn the Holy Knights against the Seven Deadly Sins and particularly Meliodas (on account of Fraudrin's grudge against him for betraying their race).
If Meliodas becomes the Demon King, this will invariably turn Liones's warriors against him once again, this time in a bizarrely inverted scenario where they are actually right. Not only would this be redundant, but it would also be a completely lopsided battle since they barely stood a chance against the Captain in his diminished state.
4 Demon King - Conflict With Sins
Meliodas becoming the Demon Knight creates an opportunity for conflict between him and the other Sins. We had a glimpse of what that might look like with his battle against Escanor, providentially contained in Merlin's "Perfect Cube."
If Meliodas becomes a villain, that will give the other six Sins a goal to strive for and an obstacle to overcome. It would make for a much more rewarding spectacle than Ban and the Captain satisfying a meaningless grudge match before a crowd inebriated peasants.
3 Captain - Giving Hope
Just as Meliodas's staggering power might make him unbalanced, it also renders him a symbol of hope and peace for the citizens of Brittania. Against superior opponents like Zeldris, Chandler, and Estarossa, he is the only one that can defeat them by himself at any time of day.
It is symbolically significant since it entails that demons are capable of saving humans just as much as they are slaughtering them. Should Meliodas's heart remain true, he stands to be Liones's greatest champion.
2 Demon King - Redefining The Demon Race
It is important to distinguish that just because Meliodas would become the king of demons, he is not evil because of it. Ever since his reawakening, the only thing truly malicious he has done is fight Escanor, who relished the opportunity since it would placate his pride.
If Meliodas becomes the leader of the demon race, it would put him in a unique position to redirect his subjects in a more positive trajectory. This means putting an end to the attacks on human villages and prohibiting the consumption of souls. Given that Zeldris and Estarossa already tried to contend him and failed, there would be none willing to protest these rulings.
1 Captain - Likability
When assessing whether or not Meliodas should become the Demon King, it's imperative to remember that he is still the main protagonist. Therefore, the events of the series revolve primarily from his perspective.
If he accepts the mantle, it would be much harder for him to be likable. The closest thing he has to compassion is by threatening others for touching Elizabeth. He is in a perpetual state of angst, making it difficult to like him, should the story be oriented around Meliodas for a considerable period of time.