The Hero level does not affect the strength of your defense itself. Placing a Hero on an island simply makes it less likely that the island will be lost to a hostile player. In order to lose a defended island, your defense must be beaten a certain number of times. However, undefended islands can be lost without anyone beating your defense.
When you have been beaten a certain number of times, a Hero will be beaten back to Mount Olympus. The Hero which is sent back is chosen randomly, but higher level Heroes are a little less likely to be sent back.