There's a hack that will let you accomplish this through query_posts() (considering PostOrder requires an edit to the core, it's no worse):
Around line 475 in classes.php (wp-includes/ directory), change:
$allowed_keys = array('author','date','category','title');
$allowed_keys = array('author','date','category','title','modified');
Then in your theme's index.php template, add this just before The Loop:
<?php query_posts('orderby=modified'); ?>
May require a bit more than that though, depending on your setup. But it will then sort posts by last modified (i.e. edited) date.