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Well, all level 5 items can be used, and all bonuses and skill slots are available. The AI now chooses a hero for a regular game from any of the available options for each faction, not just two.
There are two drawbacks: you still can't choose a pet in a regular game, and, most importantly, most of the story heroes are no longer available for regular games. For example, I used to enjoy playing as Sandro... but he's gone now.
It's debatable: you can start any stage of the campaign... but it's pointless because without playing through in order, the heroes will be level 1.