Let's look at the quote in more of its original context (link to full text of the story - note: I took the liberty of correcting what after cross-checking with another copy of the story I'm very sure is a typo in the quote):
Joyous! How is one to tell about joy? How describe the citizens of Omelas?
They were not simple folk, you see, though they were happy. [...] Yet I repeat that these were not simple folk, not dulcet shepherds, noble savages, bland utopians. They were not less complex than us.
The trouble is that we have a bad habit, encouraged by pedants and sophisticates, of considering happiness as something rather stupid. Only pain is intellectual, only evil interesting. This is the treason of the artist: a refusal to admit the banality of evil and the terrible boredom of pain. If you can't lick 'em, join 'em. If it hurts, repeat it. But to praise despair is to condemn delight, to embrace violence is to lose hold of everything else. We have almost lost hold; we can no longer describe happy man, nor make any celebration of joy. How can I tell you about the people of Omelas? They were not naive and happy children--though their children were, in fact, happy. They were mature, intelligent, passionate adults whose lives were not wretched. O miracle! But I wish I could describe it better. I wish I could convince you. Omelas sounds in my words like a city in a fairy tale, long ago and far away, once upon a time. Perhaps it would be best if you imagined it as your own fancy bids, assuming it will rise to the occasion, for certainly I cannot suit you all.
After a lengthy attempt to get us to try to imagine the joys and pleasures and cool things in Omelas, Le Guin asks us this:
Do you believe? Do you accept the festival, the city, the joy? No? Then let me describe one more thing.
And then we get the twist reveal of the sacrificial tortured child. And after that, Le Guin asks us;
Now do you believe them? Are they not more credible?
There are multiple things you can interpret the story as being about, and I suspect Le Guin intended it to be about multiple things, and you could read in a commentary on class society that would incline you to suspect a considerable degree of unreliable narrator in the part where Le Guin talks up how awesome Omelas is, etc.. But another interpretation I've encountered, which I find reasonable, is that this aspect of the story is (perhaps among other things) a commentary on utopian fiction and its reception and the resistance a lot of people have to seriously considering the idea of radically better worlds. The tortured child is a concession to readers who can only believe in Omelas if it's presented to them as having some kind of loadbearing Terrible Price (TM), and the story is structured to draw attention to that concession. The story reads to me as very much in dialogue with that classic sci fi trope of the lotus eater utopia that's superficially appealing but secretly bad (see: Brave New World, the planets of the week of multiple Star Trek TOS episodes, etc.). And in that context the "treason of the artist" line and the part about the tortured child read to me as different modes of engagement with common criticisms of the idea of utopia, the first engaging with it by refutation ("no, the Omelans aren't living superficially pleasurable but cognitively impoverished lives of vapid stagnant bliss, they're as smart and sophisticated as we are, Omelas is fun in a rich complex diverse way") and the second engaging with it by concession ("you won't believe in Omelas unless I give it some ugly underbelly, so here it is"). And, on that note, the "treason of the artist" and refusal to believe in Omelas unless it has some kind of ugly underbelly look very much like two facets of the belief that "I like it when things are straightforwardly good" is somehow an immature preference.
Basically, I think if you look at that quote in its context, treating it as a legitimate insight Ursula K. Le Guin had is reasonable; the degree to which the narrator is a character distinct from the author in Omelas is actually pretty ambiguous.