Is Stealth actually that useful in Heroes IV?

Stealth can work as you describe for a single hero, but it requires quite a lot of experience to use, GM stealth already takes 10 skill points total, then you want pathfinding, combat, magic resistance and some magic. You are looking at roughly lvl 20 to have an effective stealth operative. While this is doable with a single hero, you can forget about creating a team. As experience is divided up for each hero, a team of 7 will be much lower level.

There are several problems with using stealth beyond that:

• It probably works exactly once. As soon as you capture something, the opponent knows you have a stealth hero and will initiate countermeasures. E.g. use a secondary hero to hunt your stealth hero down.

• Taking a single town likely has very little effect on large maps.

• a single hero, even a team of 7 mid-level heroes won't do much against a decent army on large maps

• scouting is a decent choice for might heroes due to pathfinding, so the risk your stealth hero is discovered and captured is certainly there.

• the opponent may also use a stealth hero and use him to spot yours.

The biggest problems with stealth are, that you can't use an army and that the entire 5 skill points you spent on it are countered by 5 skill points the enemy spends. Once the enemy knows a stealth hero is there, he cannot do much anymore.