Until we have a good way to find all relationships that apply and follow inheritance automatically, we should be adding the relationships for things like arrangements. In the same way, we should add Shakespeare as a lyricist of “X Songs on Texts by Shakespeare”, even if he was dead by the time his texts were used.
I personally stop at based-on works though. IMO “Fantasia on the Motives of the Opera Whatever by ThisDude” is not a work by ThisDude at all, so I add the person writing the Fantasia as composer, and link it to the opera with “is based on”, and that’s all I add.