After reading that heroes where being curbed with 0.86 I was quite happy that their power was being reined in (they where ridiculous in the first batch of betas).
After playing some games with the current public 0.86 (from start to finish, hard to ridiculous levels) build I have to say some things have went to far though and thought I'd share my opinon.
First the XP-Split seems like a reasonable mechanics and how it is implemented with encouraging having heroes lead armies
also looks good.
It interacts badly though with the other main reduction in heroic power: Slower progression.
While the old progression and everyone getting equal full experience was silly and every hero ended up getting everything now most heroes (no matter where they start) pretty quickly peek at Level 11/12 no matter how many difficult fights seem to be fought even with single heroes. (Not entirely true but its very visible that the exponential softcap seems to be around Level 13). While not a bad Idea per se it seems to be a bit to restrictive even with the other stuff blended out. (Am I getting it right that gained XP is also proportional to hero level and goes down over time now if not as markedly as the rest?)
My personal (possibly unrepresentative) experience with the game lets me guess that a soft-cap around 5 Levels later (possibly even just at Level 20) would be more reasonable.
The progression at the start and up around Level 8 seems roughly alright but I reckon the speed of progression from Level 7-10 should be drawn out a bit to the area of abound 6-17 and go grow slower markedly after that (with the curve still going up a bit less steep).
(can't give you a hard number here since I am not a coder but I'm sure for an experienced coder its easy enough to set up what I outlined with the right multiplier/power) first for reasons of fun (progression is fun, fighting 10 hard fights (with a single hero and normal units in the stack, multiple troll-stacks with warrior+Shaman and similar) without seeing any progression is not) and secondly to make heroes a bit more viable again and reduce importance of equipment (which will go up with what you have presented for beta 3), and balance of units (which seems ok in my book except for the balance between wages and gold income. But I feel that is more of an economic thing to be balanced with tax-rate / unrest ect. on civ Level being good targets for reworking the mechanics which you are addressing with beta 3 from what I read.)
It also sadly considerably lowers the power of magics since magical picks are quite an investment now (especially higher Levels, making archmage possibly unattainable even with a focused strategy since magical picks also seem to rare even for mages.) + most hired heroes start at a much higher Level and don't progress much so certain magics are barred completely beyond Level 2-3 if they can be found at all.
Also the other heroes beyond your Souvereign and the Level 1 guys to aid you at the very start (which seem quite a bit scarce in my book with mostly finding 1(always)-2(sometimes but not often). Maybe upping that to 2-3 would be more fun without being unbalanced and might help AI either.)
starting at Level 3 (which also seem scarce)/5 (which are ok in number)/7(which seem overly abundant)/9 (which seem a bit to numerous given how late they come) but not getting additional abilities essentially turning them into Level 2,3,4 and 5 heroes with a very limited progression hurts the heroic side / RPG-Side of the game quite a bit.
Please rework them to at least have abilities representative of their Level (not putting them back on the old levels please that change was very much alright but sadly tacked on and not having them thoroughly reworked). That combines quite unfavorably for the Level 5,7 and 9 heroes with the slower progression turning them quite static. (still very much worth the while thanks to being able to carry good equip which drops abundantly right from the start and it takes longer sometimes from 1/3 to 7/9 than getting Brennons Letters. But then heroic play might be a bit to much equip-centric.)
If Level 9 mages would be archmages or at least Level 4 in one of the schools (or Level 3 in all Schools they got) it might be better for example to set them appart / more desirable to get them (instead of things like Sculla's Mace and similar equip being the deciding factor which heroes are the most desirable).
This leads to diminished fun / content in the previously most fun part of the beta. The rest might have come a long way and Beta 2 was very much a step forward from beta 1. But I'm not sure curbing heroes to that extent was actually a good Idea.
Regular Units seem Ok now in my book
(especially poineer derivates with merchants and cheaper units civ-trait) and fill the whole heroes left gameplay wise. I see potential for additional gain in gameplay if heroes are tweaked up again. I doubt the above suggestions would make units less viable again. (If heroes are not tackled / upped a bit the whole thing might tilt if selling prices are slashed to much and counterattack + similar stuff is easily available with equip for regular units making heroes actually the strictly inferior option... traits might need to be upped like counterattack allowing unlimited counterattacks as compared to swords with just a single hitback. Lest non-magical, non army-buffing heroes become redundant compared to normal units and not being worth the effort...)
So I hope you are willing to invest a bit more work into that part of the game to make it more fun again (and add some more on the already solid core of adventuring content and magics.). From what I see that should be doable without a huge amount of work (that of course being an outsiders view might be way off the mark).
Please don't understand that as a harsh critique / presenting other core ideas here. The groundwork is more solid at its core / the steps where in the right direction and allow for a better tweaking and a better result in the end. I just think you went a bit to far on the diminishing part of the balance/limitation<---> power/fun scale.