Just because you like it the way it is doesn't mean that it isn't totally imbalanced. 
You don't need Paragon for strong heroes. In all my games I've only used Paragon a few times, and in every game that's lasted a while I had strong heroes.
Let's define "strong heroes". I think a strong hero is L20+ or even lower if you have an Assassin with Double Strike, Charge, and Sweep, you think a strong hero is up to L100+. The fact is that you can get strong heroes in most (if not all) games, NEVER using Paragon. FACT. Multiple level ups for -5HP for Sovereign, totally imbalanced. FACT.
That is the cold hard reality. I bet you didn't like it when champion XP was split either. But it is necessary to tone done Paragon, especially since it says something like "+1 Level" not "+1 Level plus XP% bonuses".
Alternatively, we could always make the Sov loses 5HP every level gained by a Champion using Paragon XP. Would you prefer that? The -5HP for Sov is meant to be per level, not per cast. So I think you can have one or the other - 1 Level Up per Paragon, or -5HP for Sov per Level Up caused by Paragon, down to the minimum where Paragon can't be cast.
If Paragon doesn't reduce Sov HP, that's a bug. I'll report it.