I've tried maxing out leadership, so that didn't work out either - it might have raised the maximum amount of heroes you could have but at that point in time I was decked out with like 20+ heroes. Couldn't be bothered to test that out. On that note, steamrolling with that number of heroes makes encounters easy enough, except for those missions with hordes of enemies (eg; take out the base).
And yes, if you get pummeled too much within a short period of time you die instantly. It is a good idea to use two handed weapons to take out enemies quicker in that sense. Just use hit and run tactics when you're on foot. Fights are much easier on horseback, though.
One tip is to quick save before participating in tournaments. Take note of which ones you've been in, and if they don't give you a "special gift" (usually a piece of equipment, either weapon or armor), restart and participate in another one. You can find out where tournaments are by talking to arena masters, which should be present in any major city. The stuff you get from tournaments are usually pretty powerful and should take you places.