How is Willy Loman a tragic Hero in a Death of a Salesman? Or, is he not?

It is has been debatable whether Willy is a tragic hero, or just a tragic character. However, what makes a character a "hero" are the potentially redeeming traits that may help the character serve a higher purpose, should the character learn to change. 

The redeeming qualities of Willy Loman are evident toward the end of his life, and after many tragic mistakes. Such mistakes constitute Willy's essential flaw, which is where the term "tragic" would come from; Willy is, essentially, his own enemy. 

Now that it is clear as to what makes him tragic, what are the redeeming qualities that would make him a hero?

First, Willy recognizes in the conversation with Bernard, Charley's son, that Biff's life changed the moment he (Biff) caught Willy with a mistress. This is something Willy had been denying to himself for years while blaming Biff for his own failures. Before this moment, Willy had never admitted his own influence in the downward spiral that has become Biff's life. 

Second, Willy is able to discern, also for the first time in his life, something other than the shallow end of things. While he does not mend his relationship with Biff, he is able to finally realize, toward the end, that their riff was caused, precisely, because of how much they once loved and admired one another.

Third, Willy realizes that all these years seeking for the superficial joys of life has rendered him quite poor. He has "no seeds" planted from which his kids can reap any profits. The sad scene where Willy tries to plant the seeds that he purchased  at the hardware store, right on his concrete floor, is a strong metaphor of his life: his eternal search for quick and easy money did not allow him to build upon what really mattered. 

Fourth, Willy decides that he can still make amends for his family. Unfortunately, the only way for this to happen, according to Willy, is by committing suicide; he feels that he can only help his family start over by removing himself and letting them cash in his life insurance policy. 

This latter fact is what seals Willy's status as a tragic hero: he is willing to end his life on behalf of his family after years of being selfish and self-centered. He has changed, and is desperate to redeem himself. His death will put an end to the endless years of wasted time and money that he has caused by dragging his family around, in search of an nonexistent dream. Therefore, Willy's entire life is his tragedy. The fact that he will make the ultimate sacrifice to make amends for what he has done to his family is what renders him a "hero" in the literary sense.