Loop closure in Hector SLAM

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1) Hector SLAM does not use loop-closure for mapping, but instead uses laser scan-matching techniques (/hector_mapping) and an attitude estimation system based on IMU data(hector_imu_attitude_to_tf) for mapping and localization. The abstract on the paper reads

We show that the system is sufficiently accurate as to not require explicit loop closing techniques in the considered scenarios.

Details can be found on the original paper by Stefan Kohlbrecher and team here.

2) I do not think there is one single answer to this, as this depends on the overall setup being used. If you're looking for examples of some hardware that might work, the RPLIDAR-A1 by SLAMTEC is a low-cost well tested LIDAR that has been used with running Hector SLAM.

3) I don't understand what you mean by 'improvising the error'. Can you maybe rephrase this or provide more details? Also, which error exactly are you referring to?