My mom raised us this way, giving us this type of "freedom" to be with our boyfriends at home, as she felt it would deter other, less desirable partying, etc. The outcome?
My older sister got pregnant at 17, despite being on BCP, because she wasn't using condoms in addition to the pill, and then struggled so much with the pregnancy and having a baby that she had to drop out of school. She still hasn't managed to finish her GED 13 years later. I know she regrets dropping out of school more than anything, as its really held her back trying to further herself, but she feels like she's stuck in this endless loop now because its been so long that she has forgotten so much of the material to even be able to pass the GED.
Yes, teenagers are going to be teenagers, and she likely would have just had sex elsewhere if not at home. But I think letting them have sex at home makes it happen more often, rather than the teens having to find opportunities somewhere else. the more often it happens, the higher the risk of something going wrong IMO. I waited until I was 17, and in a committed relationship (with my now husband) before having sex, mainly due to seeing what had happened with my sister and wanting to be more careful. But even being more careful, I was still only 17, and we only used Depo, no condoms. I still could have gotten pregnant, too, as its not 100% effective. No birth control is.
I think the best approach is keeping the open relationship with your daughter, talking about any concerns, making sure she is using protection if she's going to continue this, etc, but I don't think allowing it to continue in your home is helping anything. Yes, it may be keeping them away from partying or whatnot, but every time they are given more opportunities to have sex, they are just increasing their odds of a teenage pregnancy. What they choose to do on their own is on them, but its on you to teach her to be smart, to use protection, to make wise choices in choosing a partner, to teach about STDs and pregnancy, and to not make it easier for them to have sex. You can't stop teenagers from doing things like this, but you can certainly let them know that you think its something to not be taken lightly.