Neither Heroes nor units should be destroyed by that process. When a peaceful withdrawal occurs (such as a peace treaty being signed, or a change of treaty forcing allied troops to pull out), and units which cannot retreat to home territory are removed from the field and placed in the deployment area.

Any heroes attached to those armies will vanish - but they should return a few turns later (it looks like a hero offering his services, but has different text, and the cost is free)

The hero never returned. I didn't even get the option to recruit a new one for over 20 turns (60 now - I think it was "fused" somewhere into the background... yay! Game thinking I own 2...). Still waiting for my legendary witch with heal spell. I have to autoresolve the heck out of a 3 frontal war for a time. Good thing I have a heal spell and a fullstack of overpowered Icespire archers that cost me an arm and a leg...

Your hero returns is bugged!

Make that 100 turns now. The hero never returned, it is nowhere to be seen, but the game seems to think I still own 2. So I am permanently down 1... Seems making peace is the worst idea in this game with heros in enemy territory due to your bug.

I will test something. I have the theory the game accidentally "fused" my two heroes. So I will disband my last one too and hope two new ones arrive or a hidden second one takes its place and all is back to normal. If that doesn't work either, you guys need to fix this or let the retreat mechanic port your armies onto ANY free province you have and ONLY disband when no province is even accessible. Your heroes always transferring to existing units though.

Edit:

I was right, removing the hero immediately respawned the second. Now the first was dead though. Normal respawn now possible.

Still YOU ARE BUGGED. Your retreat mechanic reserves the hero for the same army it seems sometimes. So it couldn't respawn.

It might be related to having two IDENTICAL heroes (two witches because fairly all others are crap for Icespire). Either way I had a lot of trouble due to the bug, so fix it for others at least.

I have an idea of what may be causing this bug to occur...

When a hero is temporarily removed (peacueful withdrawal), they still remain in the game - just not on the map. As such, when the game checks, it thinks you still have 2 heroes, because the one in limbo has not been deleted.

In theory, it should then offer back the hero in a couple of turns. The problem is that the code which offers heroes first checks to make sure that you do not already have too many - and when it does so, it will still be counting the one it's trying to offer you, and will fail.

Because of this, disbanding your other hero will probably work, as it will open up a slot for the returning hero.

We will fix this as part of the next patch.