Demon invasion.

Yes, spells and the master ability are definitely present; I don't think it would be possible to get past the first stack (or even that) in the Dungeon without them. As for additional content, the first campaign about the League, as well as the campaigns from the previous parts of Heroes 5, are worth playing.

Regarding the transfer – I attacked an enemy Castle where the last demon was holed up. And in general, the transfer worked as intended (based on the comments in the thread). The stats dropped to 1 1 1 5, and the hero had nothing left except three spells and remnants of an army, but there were too many powerful stacks around. A hundred Cerberi/Furies/Scouts are virtually invulnerable with magic at level 1, because 60 damage from a Wave of Fire is really insignificant. There were also three hundred zombies, which could theoretically be kited, but spending 40 minutes on that is too much for most players.