It will always be a question of personal judgement. There is no point where you can say: this is the optimum. Of course leveling up and becoming stronger is an important part of the game. If you would only have "skip the fun" characters who start with 200.000 gold you would basically only remove the time between starting a character and reaching the maximum level, but still it would be less fun, because the game would be reduced on making the best build for you and then maximizing your skills. But all the small motivation of getting another level and buying better stuff, that kind of gives a regular "push" to motivation and keeps the game "rolling" would be missing.
This shows how you always have to find a middle way between "skill based" and "RPG". My personal impression is, that a 4th heirloom level would move the game too much towards the "RPG" part, and if this is combined with superior skills you would have single players dominating too much, because in my eyes "teamplay" should be the third pillar of success in cRPG. (Which means you should ALWAYS have to rely on teammates to win a match. I don't like the idea of single players killing 25 enemies per round single handedly, which would make him win almost always).
Indeed my preference is "teamplay > skill > character build" for impact on your gameplay. And yes, I know, many players disagree to this, especially to teamplay being on first place. But as I said: it's a question of personal preference.