If they have released an official Android 1.6 Donut firmware update for the HTC Hero then yes, it can.
Otherwise, might I recommend using gbhil's ROM for the Sprint Hero that he has posted in the Hacking section? Apparently all who have tried it so far has liked it. So far he has only posted up his 1.5 Cupcake version, but I believe within the next day or so he will have his 1.6 Donut version up for download.
Phil.
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