The spawn level (ie. which heroes can be spawned at each fame level) is kept in CoreGameEvents.xml in Data\English (from the main installation directory). When the number is -1, any hero can spawn.
As of now the problem is that no higher level heroes have been created. You would need to create champions with a higher spawn level and then edit the CoreGameEvents.xml file to have those higher level heroes come up. I'm not sure if you can change the CoreGameEvents.xml file from the Mods folder though.
