Look, let's face it, you hire a new guy to help you out, and he goes out and gets stomped on and loses a few teeth. Then he gets thrashed and his leg is permanently mangled. Then he gets his head caved in and can't remember which way is north.
I love the system -- all of a sudden it's not so fun anymore to just go around thrashing baddies with your heroes, because your heroes take on the kind of permanent damage you'd expect from getting hacked on with a sword or pierced through the abdomen with an arrow.
Sometimes it all comes down to luck, and some guys (or gals) are just luckier than others. Sometimes it even makes sense to bench that guy who used to be your shining star, because he's all used up.
On the other hand, if you get the right upgrades, a hero could be beat the hell up and still be a valuable addition to an army, granting them experience and combat bonuses and other benefits. That guy can't fight for **** anymore, but boy do the men love him! Who was the Civil War general (I think it was Hood?) who had to be strapped to his horse because he was too mangled to keep himself in the saddle?
I love the heroes permanent damage system. I read that there will be a potion that removes those things? Understandable, but don't make it too common. I like my unlucky old-timers to be scarred and battle-weary!