The only time the villains heal when we play is when they are KO'd like a hero. Otherwise they take wounds and carry them around like anyone else. So far it has not been swinging the balance one way or the other between villains and heroes.
This question about the villains healing (or not) is fascinating! We've always played that they heal as soon as they leave play for any reason and have found the challenge level to be just about where we want it. I'm somewhat stunned that the rulebook doesn't clarify one way or the other.