Gnomishness

As I understand it, the human Castle doesn't even appear; you just need to defeat the heroes, right?

Exactly. Right now, it's just about defense.

Also: I don't understand the point of defending outposts. What's the use of them?

If the enemy captures outposts, they'll get a lot of gold. The formula is: difficulty level multiplied by 10000.

I think it wouldn't hurt to place a Mentor somewhere.

I'll find a suitable spot. It will be ready tomorrow – maybe I'll also fix something else at the same time.
P.S. Should I increase the army size of the red faction? Were there many of them?