See i almost thought my memory was failing me, but actually the basic Locust Swarm is working like i said.
Icefrog changed the 'Data - Damage Return Threshold' to very high in DotA, thus the locusts (ghosts) only heal upon return.
If you want have instant heal, you can just lower that threshold - e.g. make it match the damage output of said locusts.
Quite an interesting ability.