Thanks for playing!
The level 3 thing was a bug (or rather an oversight on my part) which I fixed just now. The lose condition is when:
- all heroes are dead
- you take too many turns to defeat all enemies
As I mentioned in the description, all heroes being on the board simply ends the current turn and not the game. Heroes attack when they bounce against enemy blocks. Them being left on the board essentially makes them pawns to be used by the next Hero that bounces them and re-activates them .