3 Garrisons will magically discipline your fully cooked bandit troops into normal troops. Don't know if this will get patched out and I don't think it works on troops that would require a warhorse (not sure), but it turns forest bandit into Fians and that's the best use of this perk.
I've seen multiple people mention this on the forum, but I don't know if you know (haven't seen it mentioned), it also works if you have a companion in your army as a separate party. Give them bandits ready for upgrade, inspect their troops again later (not sure exactly how much later) and they've been upgraded. Can't confirm 100%, but I think it also works for troops that require horses. I believe they've done this so AI lords could upgrade troops normally, without having to 'teach' them to buy horses as necessary.
This is more practical than the garrison since you can do it 'on the way' (if you're at a point and choose to lead an army composed of your clan's parties). Let's not speak about the other two major problems in this case, namely that your companions over-recruit above allowed number as well as gifting your hard-earned elite soldiers left and right whenever you visit a friendly town or castle.
Edit: and the third problem as well: you, as an ARMY/CLAN LEADER, should have first dibs on all prisoners after a battle. The way it is now, after winning a major army-vs-army battle, I can't count I will get any of the many lords we've slain, so don't have any control over if I want to execute them or release them for improving relations or anything. This is retarded. Sorry for the off-topic, I guess this calls for its own thread.