In one of my games (just now finished) I attacked one of my opponents heroes that was flying on a Pegasi on the shoreline. Since the Hero/Pegasi were on the shoreline I had to attack with boats since land units can't attack on the shoreline.
I killed the Pegasi but not the hero. My opponent had no other nearby boats or flying units so I did not waste any more units against the hero (L10 so he was very strong) assuming he would drown on his next turn. Instead to my surprise he lived because on my next turn he was leading a full stack against me on land.
I talked to my opponent and he said he was able to just walk the hero onto land normally. Obviously what's happened is that the game is treating the hero as a land unit because he's flying. So because he was on the shore and there was land squares next to him the movement path was considered legitimate. Obviously this is not legitimate because technically he was not flying anymore due to the loss of his mount so he should have drowned/fallen to his death.
KGB