This has happened in a couple places. Relias' heroes have been battered down time and again giving them lots of wounds, including several army-loses-hp. Things get wacky with city defenders--they have negative total HP and the health bars go wonky.

https://dl.dropbox.com/u/10090435/HP%20Bug.EleSav

Also, I recommend that the AI learn how to cycle out its terrible heroes and henchmen. When they have too many wounds they become a liability. I have to cut them a break on the cities since that's where they respawn, but I've also seen Relias take them out on campaign with him.