I don't know about others but I myself don't like the taking horses from inventory thing to being with, needing equipment as well would be too micromanagey.
It could work if they created an item just called tier 2 upgrade weapon or something, but as I see with horses, I have like 10 different horse types from Battanian ponies to Aserai horses and which ones go to troops and which ones I want to save for my movement speed is not possible to discern from a glance.
With equipment it would be even worse. I'd have 20 different swords, crossbows, shields, hats, scarfs and all of that... then battle loot as well that I would like to sell mixed in. Add in all the variety of food for morale and all of the smithing material. We're talking an inventory so mixed and so large that it would be a nightmare to manage.