Eliminating the heads one by one would probably be the better strategy for weaker to normal leveled parties. Eliminating any 3 head prevents the Hydra from ever using the Head Crash which can be very dangerous.
Unlike the battle with the Serpent, it is advisable to just attack the main body head on. The Hydra's medium resistance to all magic means it is preferable to attack with special attacks. Have Feena heal the party if necessary but this shouldn't be needed.
The battle ends either by depleting the bodies HP or destroying all four heads.