It really depends on what type of hill stream loach you are talking about.
If your talking about Gastromyzon species then yes they do like being in a group, but not in a typical schooling way. They generally like to hang out together and males will have their sparring matches which are usually harmless.
Beaufortia is another hillstream loach and also likes being in groups where they can interact together. They will protect their chosen places but fights are usually harmless unlike Sewellia
If your talking about Sewellia species then these also like being in a group but more so pairs since the males can get very territorial and aggressive to one another.
None of these are true algea eaters although to the naked eye it looks like that is what they are feeding on. They are actually eating the micro-organisms living in the algea. I have at last count 13 (possibly 15) gastromyzon species and they have all taken readily to tropical flakes, sinking catfish wafers, catfish algea pellets, and defrosted daphnia. They have never really shown a great interest in bloodworms either deforsted or dried.