In the current version of LogEntryEventBuilder, it only checks the field LoggerSettings__c.IsApexSystemDebugLoggingEnabled__c to determine if it should call System.debug(). But for the managed package (any managed package), calling System.debug() won't work (Salesforce hides the managed package's debug lines from the customer org). This results in a performance tax, with no benefit to the managed package.

The builder class's code needs to be updated to also detect if the code is running in a namespace/managed package - if so, don't call System.debug().