Piranha,
I wondered why I kept getting hero offers for 400-600 gold even with no allies!
The XP from kills increase sounds good. Lets heroes get their first couple of levels easily then it will get progressively harder to level. It may still be too low to get heroes past L5 or 6 so you may have to eventually lower the XP needed for higher levels.
As far as the Hero increases go, it's a good start
I'd still like to see them back to Beta3 levels (+5 for Paladin, -5 for DreadKnight and +8 or +9 for Valkrie). I don't think Beta3 heroes were over powered at all and Beta4 are even weaker. In fact, if on turn 1 you let me buy a Pegasi for 500 instead of a hero for 500 I'd buy the Pegasi. You get 1 more bonus (over a Paladin), they are the same strength and it flies. A hero should be a better investment than a common 3 turn unit. You can argue heroes can search ruins but really only the Paladin is good at that so you are still better buying a Pegasi and looting some gold for a hero on turn 2-4.
KGB