It doesn't sound like the compost was too hot, I missed the part about the compost being applied way before the Hostas at first. The tree does look big enough to provide enough shade.
That rock border is really cool, I wouldn't disturb it, but would add organic matter inside it later this fall when the plants have lost any remaining leaves from frost bite. I would probably avoid peat since it can alter the PH, the tiny particles can exacerbate a drainage problem, it holds moisture too long until it does dry, then becomes hydrophobic. Preferably leaves could be used, but mulch would be fine. As these break down over time, that will improve the tilth, drainage, add some fertility, and give those darn pill bugs something else to eat. They're supposed to be on the cleanup crew, but as you've seen, aren't above hunting a meal if necessary. This year has seen an exaggerated explosion of these things with all of the excess rain. Their numbers are not your fault, and as the weather returns to normal, so should their numbers.
After a couple years, the fertility of compost has likely diminished to negligible levels. A new sprinkle on top of the leaves I proposed adding would go a long way to pumping it back up. Hopefully the Hostas will emerge in the spring ready to look pretty all summer. Doubtful the pill bugs ate the whole things, hopefully not.
Many birds love to eat these things, and slugs. A bird bath in this area could help attract some helpful predators to groom your plants. They are probably more effective than Sevin, and no concerns about poison substances. There are also predators of other pests that might visit your plants that could be harmed by poisons also, eliminating some of your help in the process, and benign visitors like butterflies. I wouldn't want to put that stuff near plants intended as food for myself or wildlife. If you have multiple tomato plants, for example, spreading them to different parts of the yard if possible, or even just having other plants between them, can help avoid large adjacency-enabled explosions of pests.
There are so many pretty plants that would love to grow in that space. Many are not as beloved by pill bugs and slugs, so might be a lot more suited to being able to get going there.
