Below is the link to a guide on how to root the phone.
http://forum.xda-developers.com/showthread.php?t=559613
Download Flashrec, you will need to google for it and DL the apk. transfer to your phones SD.
Here is the link to the recovery image I used, instead of the one that guide recommends. I have found it has the most options and functions.
http://rapidshare.com/files/320335178/recovery-RA-hero-v1.5.2.img
Once its installed do yourself a favour and use the recovery mode (Home + Power) to create three partitions on your SD card. You will need a 32mb Linux swap file, a 500MB ext2/3/4 partition and the rest is for your FAT32 partition.
I am using the MoDaCo 3.1 ROM based on Android 1.5 (its very fast)
http://www.romraid.com/paul/hero/3.1-update-hero-modacocustomrom-core-signed.zip
You WILL need to wipe the data partition on your phone.
If you open the recovery mode you can use the SD: update command to load the custom ROM and the updates. This is much easier than the adb route. You will need to save the radio and teknologist files as well as the ROM onto the root of the SD. The teknologist file is an update to the kernel. The mod ROM uses v1.8 of that kernel.
download the latest radio ROM here (this is an update ROM, use the recovery mode to install it. Home + Power = recovery mode.
drop me a PM and I will email this guide plus all the files to you. You will however still need to download the ROM of your choice. 100MB files don't work nicely with mail servers.w
Short version
Download Flashrec -
http://flashrec.googlecode.com/files/flashrec-1.1.2-20090909.apk
Download recovery ROM -
http://rapidshare.com/files/320335178/recovery-RA-hero-v1.5.2.img
Download ROM - personal preference but I suggest
MoDaCo 3.1
Download Radio ROM -
http://www.romraid.com/paul/hero/update-hero-radio-63.18.55.06JU_6.35.09.26-signed.zip
Here are the links to my sources
Recovery ROM developer
MoDaCo ROM thread
XDA-developers forum for Hero Android development
feel free to ask for my help.
As a recommendation you should download Astro File Manager and get it to backup your applications before you flash. Modaco ROMs employ apps2SD but this doesn't always work so make sure to keep a backup of your applications on your SD card