@Foreigner - are you saying that basically the space between both is the ideal spot? Does one necessarily need aspects of both hero and villain, or is it just something that
can be a path
It depends on the specific hero and villain we're talking about...
But in older stories, it's a classic good vs. evil trope. The evil is pure and not redeemable. The good is in a long battle with the evil to defeat it.
In more contemporary tropes, evil used to be good but went the wrong way, and perhaps may still have a shred of good within them that can bring them back from the brink, otherwise they must be vanquished. The good person on the other hand must get in touch with their own shadow to defeat the evil because a deep belief in good alone is not enough to understand their opponent. The lesson is that you cannot transform into a more powerful, self-actualized version of yourself without touching on the same darkness that corrupted your opponent. You must also "ingest the poison," but instead of being compromised by it, you alchemically transform the poison into personal power. This is the true hero's journey.
So I don't think it's about "in between is best," it's about integrating the light and shadow into one conscious whole without one's spirit being corrupted forever. But perhaps I am being too Jungian about it.
For example... a lot of people think actualization means projecting the best, "most good" version of themselves, always turning to the light, always avoiding the shadow, only doing what feels good, never doing what feels bad. But this refusal to look at the shadow is what gives the shadow power to suddenly upset their entire life by blindsiding them. The warrior on the other hand has gone to the depths and has integrated a larger reality that includes the shadow. There is nothing they can't see now, no major blind spots.
In most stories the hero is initially defeated because they have no clue about the shadow. They think goodness and purity is all they need, incorrectly believing that themselves do not contain a piece of the very shadow they are trying to defeat. The lack of integration is their weakness and is how the villain overcomes them easily. The villain is initially more powerful because they are already deep in the shadow. They are drawing from a source of power that the hero is not yet aware of. The difference is that the villain is consumed by the shadow and never comes back from it (maybe), so they have forsaken the good side of themselves, and refuse to reckon with both. As a result they too are splintered off from their own complete power. When the hero integrates both, he defeats the villain because the villain was not able to perform that same integration. This is when the hero becomes the warrior.