By taking out houses, you are giving him militia, but you are also slowing him down from training hippikons, which are the real threat. It's a combination of vill time, wood, and population (not only do they lose 10 max pop, but they gain several pop in weak units).
The initial ulf rush is mainly to force a ceasefire - until you reach pop limit hippikons beat RC, and he will get to pop limit before you. You will be unlikely to force a ceasefire with just RC, so he will have ceasefire in his pocket to grab a TC as soon as he's heroic.
Plus, maybe you can do the usual rush things, such as pushing him off hunt.
I almost never find ulfs to be useful after the first few minutes of classic. Their low hp and pierce armor usually means they are dead before they fight. Their main use is their training speed which lets you pressure opponents as early as possible. Concerning regeneration, the lower the max HP of the unit, the more likely it is to be dead after a confontration, and dead units don't regenerate. Percentage of hp regenerated is irrelevant. Odin regen helps most on big units like jarls, not little ones like ulfs.
DaP is right about forward building, I usually build temple at home, and longhouses semi-forward.
Note: I play Vanilla so there is no free MU, which could change things a little bit, but also I suppose cease TC grabs work differently in TT because you can do it in classic. So, just keep in mind where I'm coming from.
[This message has been edited by HailToTheOboe (edited 11-05-2008 @ 06:39 PM).]