Jill, yeah she should've but Ilyana's...well, either way works. She was really hired on more to meet up with the rest of the caravan. Her fighting in that battle was her decision.
Sounds interesting to say the least. Although I think it may work best that way for ranged attacks. Something like STR+MT up close and MAG+MT from afar. Magic or not it's still a weapon.
"Careful kid, don't get penisy"
In all seriousness though, what's the difference between Eliwood and Hector's Hard Modes besides new character's and sidequests. I mean what does Eliwood's HM have that Hector's doesn't?