Okay, I like the concept of the hydra, but there are some things that a strange about it. For starters, is the hydra a creature or a permanent? Secondly, Hydra heads are way too difficult to kill, as you need to RoFs to even get close. Just play a Hydra, a flooding, and then some death based cards, and your deck is neigh unbeatable. I'd set it up differently. Make Hydra Heads be 0|1 creatures. Make Hydra's HP equal to the number of Hydras on the field, and it's attack equal to that number plus one. Lastly, trigger all Hydra's heads to die if the Hydra dies. In this way, Otyugh's can devour Hydra's whole, and Hydra's have a weakness of paradox. Hydra's will die if all the heads die simultaneously, which isn't that hard to do with a thunderstorm, wall of fire, or rain of fire. Increasing Hydra's cost to 8 might balance things as well.
Nanite Upgrade seems cool.