I don't know about Level 20, but I definitely reached Level 10 with the veterans. Would probably get more interesting if they would get new Abilitys at Level 10, 15 and/ or 20 like switching weapons and these kind of things.
The leveling system makes much fun right now, getting some heroes at level 5 directly would lower the fun of using it in my opinion.
Right now, we do have a system where a player, especially a new one, can explore his heroes step by step, level by level and is happy when he can explore a new ability/ spell.
With your system, half of the abilities of the hero would be available already. Just think about a hero like Thranduil starting directly at level 5: A new player will have to read 6 abilitys: Sword and staff, sword, two swords, magic shield, king of the elven realm (with its difference in active and passive mode), elk.
Its just so much that you don't have time in a normal game to read everything, so you just let him go and fight because you have to focus on battle. By leveling him up, you always get a small win by getting a level and your price for that is the new ability for wich you'll often find the time to read because its just one at a time.
Next thing, if one hero has experience at the beginning, why doesn't another one?
Balin is Level 5 and Thorin not? Thorin is even older than Balin. Theoden is at Level 5 but Legolas not? Legolas is like about a thousand years older. Just don't take the experience too seriously, it will make things more complicated.
Think of it more as a system that shows you how serious the hero takes the battle. Boromir for example is at first more like a traveler who wan'ts to help out. The longer the battle goes, the more he sees that he has to take it seriously, so he first gets his armor and at Level 10 even organizes supporting troops. He gets to know the fighting area and his enemys fighting style, thats why he gets stronger with each level.
I agree that we could think about changing Levelsystems for some heroes. The hero submod for edain 3.8.1 for example made a system, where Aragorn had 20 levels so it was easier to implement his path from ranger to king and it worked out really well.
In an even older Edain version, the heroes didn't remember their level because of some bug. So the Edain team just changed the system that heroes with a higher level than 5 will be revived at Level 5. So it was much more critical to loose a hero at level 10 and a revived Gandalf couldn't directly used his Level 10 ability again.
The systems had its flaws and so it was removed, but thinking about it, letting a hero (except for example Sauron) lose one level by death could make the game more interesting.