2 modifications needed in my opinion
firstly the building should have no vision, or if it does, it shouldn't have control of the area, because it isn't a normal building.
secondly instead of whatever medusa hits it turns into stone, it should be whatever ATTACKS medusa turns into stone, because to attack her is to see her, and to see her you turn to stone. although elementals should be exempt from this.
in this way she could be combo'd with subject of loathing quite well.
also whatever turns into a building should only have the remainder hp, and not the maximum hp of the original creature.
So the end result:
Gorgon Medusa
1DL 2X 5 flux
aloft (
http://en.wikipedia.org/wiki/Medusa)
3 attack 7 health 2 speed 6 vision (she's got snakes as her hair) 1 range (snakes in her hair probably can hit air units and in a lot of depictions of her, she is holding a spear or trident, as she was punished and turned into what she is by athena due to making love with poseidon)
Ability: whenever a non elemental creature attacks medusa that creature is turned into a building with 0 vision at the end of TURN (round would be too slow, if we're remaking the medusa of legend, she turns things into stone instantly, just like how agent of death is the reaper and he kills instantly) with hp equal to its current HP and is no longer a creature.
as for the permanence of this effect, I think that when gorgon medusa is destroyed the creatures turned into buildings should remain as buildings. HOWEVER I think that if someone plays the card waken the stones they should not be turned into their original form with the additional attack from awaken the stones and they should still be buildings only receiving the +2 attack and +3 speed. Although if someone plays foreshadowing of Ragnarok I believe they should be turned back into creatures again but should not retain awaking of stone's effects due to their no longer being buildings (which means that foreshadowing of ragnarok should get a boost and take medusa into consideration OR with the expansion there should be ways to remove or counter creature skills such as this and be able to heal them.) I also think that certain elemental creatures should be immune to her because you can't really turn a dust devil into stone can you?