Is an internship in theoretical physics valuable for me?
Answering is an experimental physicist who had authored a few theoretical papers. I find the suggestion given to you incorrect (maybe voluntarily, as your MS advisor would like you to be his/her PhD student right away?). As a Master student, the level of work you will do is not limited much by your skills/knowledge, rather from your supervisor's wits and guidance. An excellent supervisor with a brilliant idea waiting to be executed can guide you to a very valuable research publication in three months or so. And of course you can be left in a corner with a textbook and generic instructions which will only leave you confused and isolated. It really depends on your supervisor and how much effort will you both put into it.