- Units in Heroes 3

Dam - the average damage (Dam_max-Dam_min)/2

I believe there was a typo. You probably meant the sum, not the difference...

1. "Combat power" of 1 unit = AS*Dam*0.05+DS*HP*0.025

The product of attack strength and the average damage can be taken as a parameter of the relative strength of a unit, but the product of defense and HP doesn't seem to make sense... Simply because HP can also be included as a multiplier in the first part of your formula. This parameter is not related, unlike Dam, to either the attack or the defense of the unit...