You can do that. E.g. pry has an "edit [methodname]" command that will spawn $EDITOR. But I usually keep my editor in a different window and just call a "reload" method at the pry prompt where I've wrapped up the logic to reload the running code.

Occasionally I may restart, if e.g. object state has changed enough, but this means that if I've set up a bunch of test data for example, and run into a bug, I can fix the bug, "reload", and the state of the running objects remain the same but the method will have updated and I can retry the same method call with the exact same object state.