I've come across this problem many times and it's very frustrating.
I improve a suggested-edit, and when I submit it, I get the error box that says the original edit suggestion has already been edited, and my edit must be more substantial. It's probably because the post was already edited by the original edit suggestion, and was meanwhile approved. It should treat my edit as if I had gone into the question and edited it. The reason I'm improving it is almost always because I am being more substantial. How about letting the edit get improved and approved?
Example, my edit: