HTC's posted a nice fat package of code on their developer portal, labelled "HTC Hero Kernel Source Code". This isn't nearly as tantalising as it sounds, but it's pu-ret-ay exciting nonetheless. Here's why.
The Hero's kernel is the bottommost part of its software; it's the part that manages basic functions like memory allocation, device drivers and the like. For modders to be able to access and compile this is great news for potential Hero modders, who'll be able to drop this kernel into cooked ROMs with all manner of interfaces, app configurations, performance tweaks and the like. What this won't do is help bring features like Sense to other handsets—though modders are doing pretty well with that on their own—because those components are distinct from the kernel.
While this might seem like a generous move on HTC's part, it's not: The Hero's kernel is a modified Android kernel, which is in turn a heavily modified Linux kernel. In other words, parts of it are irreversibly open source, which means that HTC is legally required to release this code — they're actually kinda late here. [HTC]