Hero is naive FEMALE feminist who wants to hero but doesn't want to be held back due to being a girl, so she is hiding her gender, and the other girls are helping.
They kicked Ares out not because he was "useless" but mostly because he's a suspicious AF guy. (His uselessness was a convenient excuse.)
According to one commenter, the manga skipped on an incident that occurred just after Ares was kicked out. The Hero tried to recruit a (female) priest like Ares suggested, but since she was hiding her gender (and her identity as hero, for some reason?), everyone laughed at "him" (her) for trying to make a harem. Losing one's virginity can SEVERELY weaken a priest's powers, so most female priests stick with professional or all-female parties. Hero tried to recruit at the church, but was similarly denied. Hero decided to become a healer herself (and failed obviously) and tried to recruit a female warrior, and was consequently laughed at even harder since no self-respecting female warrior would join a newbie's harem team and/or a newbie team without an actual healer.
Angry hypocritical Hero lashed out and caused a massive brawl in the tavern, severing limbs and nearly killing multiple people. Ares had to come in after to clean up.
Ares doesn't need the hero to be strong or good; he just need him (her) to be strong enough to SURVIVE THE JOURNEY. Hence, he's trying to powerlevel her with softened mobs.
Ares himself (Lvl 93) is strong enough to take on the demon army on his own, but he needs the Hero's Divine Blessing to actually bring down the Demon King.
He cannot reveal his actual level because he was ordered to by the POPE. Popes in medieval times often had power equivalent to actual rulers, and this is a world where faith has a direct impact on powers and abilities.