In this Beta version, I've really enjoyed that it takes a long time to raise Heros up.  Getting your Dread Knight to +2 attack and +1 Command for the full +3 is a big deal.
I encourage you to keep this slow rate of raising.
One of the things that I wasn't wild about in Warlords2 was that a stack with a +4 or +5 Hero was pretty much unbeatable.  Less fun for the defender, and less strategic overall.   I'd rather the Heroes be important, but not the be-all-and-end-all of the game.
So consider that when you change the cost of improving Hero abilities -- don't make them much cheaper than they are now.  Also, items need to not be too overpowered.
Thanks,
Jeremy
-----------------
[On another note, Dread Knights feel MUCH more powerful than the other two types of Heros.  I almost create them.  Maybe knock a point or two off their movement -- people would still play them.  Alternatively, have a particular type of Hero show up -- that way, you'd have to decide if you'd rather have a Valkerie now, or risk waiting for a Dread Knight later.]