From the REG:
Instant Abilities > Convert > Default Conditions
• If an Evil Character is converted to a Hero, it’s special ability works as long as it does not harm Heroes.
It would seem, in this case, that your opponent could not discard a hero from his territory to fulfill the cost-effect. I seem to remember there being a discussion that if the SA could potentially harm a hero, then it would not work. If anyone else can remember that thread, then could you refresh me on the final decision?
At face value, this SA does not directly target a hero for harm, so it should work.
