So wait, is a group of 20 level 1 spearmen, 20 level 1 warriors? They would be stronger than a level1 hero, even though a level 1 hero is much more costly? Or are the spearmen as a group a D20 level 1 warrior?
In MoM it was the latter and it was funny how a simple heal would bring back units from the dead.
But in case of the latter it would be strange if a group of units was turned into one hero.

Anyway, don't make it to customisable. Else any hero can be turned into the optimal hero and the heroes will lose their uniqueness and become just another unit.