After clearing Stage 1-12 you can reset heroes at the Harbor. The number of Diamonds required to reset a hero depends on the hero's level.
Resetting a hero will reset the hero back to level 1. When you reset a hero, you will receive all the resources you used in leveling that hero up and all the equipment the hero is currently using.
In the list of items that you will be getting back, the first item listed is the hero at level 1. This demonstrates that your hero will be reset to level 1; it does not mean you will be receiving an additional version of that hero.