I'm assuming that the "compatible" word is just referring to a mounted Champion occupying a hex with a mounted unit and an on-foot Champion occupying a hex with a foot unit - correct?

This is the way I understand it too. Except that a mounted Champion may be joined to an foot-unit. Though mounted he is restricted to the foot-unit's movement capacity.

A Hero, when deployed, is placed on a hex that is occupied by a friendly troop with compatible movement status (i.e., a foot unit if the Hero is on foot; a foot or mounted unit if the Hero is riding a mount).

Sure. It's actually in the rules though on p. 4 under "Hero Deployment"...



So, a Hero can never move faster than the troop he leads (ergo no Hero-on-foot in a mounted unit), but can be slowed down to stay with a troop he leads. (I deduce that's the reasoning behind the rules.)