Being near the well isn't the safest place for a hero. If you occupy it on the first turn, they'll immediately kill you. I found a safer spot and moved to the well on the second turn. My hero, Railag, came to the Tournaments having only reached level 6 because I didn't risk attacking large groups of strong neutrals guarding chests and knowledge dolmens. He only captured a lumber mill, a mine, and a couple of quarries. However, without counting the losses, he cleared the arena. That's why his army wasn't too large. He leveled up to 8 after winning. Anyway, in the next mission, you can't level up beyond 18. Moreover, it's easily completed even with Railag, who isn't fully leveled up in this mission.