I managed to beat it with this method

I first set an award flag to somewhat near the enemy lair, maybe 3/4th of the distance to the lair from the startin castle, and build an outpost ASAP there for where I will build rest of buildings. Doing this, the heroes do not have to walk so far and are always close to the action. As I expand the outpost and its guilds, I build guardposts on its borders and gradually upgrade them. (the guard posts are important because the spiders will accumulate from the teleporting lichs that spawn)

My home castle only has the rogues guild, the gnomes, and 3-4 guardposts (upgraded to level 2-3). The posts are to defend against spiders and sewers because there will be no heroes usually. I delete the marketplace. The castle accumulates a million annoying houses. I build trading posts in a line towards the outpost to supply the marketplace that is at the outpost. I try to turn off a lot of the tax collection at the castle area so my tax collectors stay at the outpost area. With the 4-5 trading posts in a line, and a level 5 marketplace you should have a very large income.

Trying different strategies, I feel that krypta/fervus/discord are not useful because the heroes will die too often. I feel that paladins are really important, and so are wizards. I build 1-2 wizards guilds early along with 2 warriors guilds, a duros, and some agrela. At the point where I attacked lairs (around turn 30), I had 4 Duros, 5 warrior guilds (all paladins), 4-5 Agrela, 4 rangers and 4 sun goddess and 3 wizard guilds. I think it is very important to have the agrela, so the heros do not die. The paladins are strong at defense and do not run so often, so they are also very good against all the "scary" bosses that spawn constantly. The wizards and rangers supply good damage from range while the paladins duros and sun goddess ladies soak up the damage.

After you have all those heroes assembled, I put a 10000 or 20000 bounty on a lair, and try to keep wizard towers and an inn close by, so they do not run far and so that I can use lighting storms if the enemies are slowing down the damage. The very high regen on the boss buildings require you to have it completetly surrounded with heroes.

Petrify the dragon boss as soon as he spawns because his aoe damage is a killer. Also put small bonties on the liches if they teleport inside your outpost area, or near your castle, and put bounties on them after you destroy a lair.

As soon as a lair is destroyed, I let my heroes go back to upgrade gear and buy rings, and to clean out all the liches spawning spiders. (if you have level 3-5 guardhouses surrounding your outpost borders and some in castle area, you should survive the spiders while all your heroes leave your place a ghost town fighting the lair)

After the blacksmith is not filled to brim with heroes and most liches dead, I rince and repeat the same method for last two lairs.

I won around turn 40-45

I did not use the sorcerer spells because they were not necessary, and the potion shop I did not use except for fire balm. I personally think heros spend too much time and money on potions they do not need/will not help them much so I do not like to build it except when I want to give wizards ability to transform. Would rather have heroes upgrading and enchanting weapons/armor and saving for ring of protection and fighting enemies, than camping at potion shop. The only use I could see for sorcerer spell is to tell the paladins or the sun ladies to stop attacking the lairs when you are not ready, because it spawns bosses and increases the HP on the lair.

I did not use the tournament in the playthrough that I won, although I could see a use for it for the wizards. PErsonally I think it is unessesarry and will waste the heroes time when they could be attacking enemies.

I did not hire many rogues and I am glad for this decision, because the dragon boss aoe will obliterate rogues and their low magic resistance.

Wind adepts I think (weirdly) die more often than the sun ladies. The adepts also seem to get scared very easily. I used to love wind adepts but I think sun ladies are better now. The sun ladies will also defend your realm because they like guard houses, and there are plenty of them in this scenario to build and they are under attack a lot. The cyclone spell is good against masses of enemies where heros are struggling, but the lightning storm works better and hurts more.