I like this idea, reducing things to groups rather than having to sort through all that trash in your inventory. But maybe the game could also tell you which units the loot was from.
Rather than iron ore I think it would be nice to see it as "Scrap Iron" for immersion reasons, it could have the same value and effect economically and for smithing. Perhaps scrap bronze as well. Possibly different tiers for the different units, looters or peasants might produce "copper coins" mid tier units "hack silver" and top tier "gold" or jewels. Maybe even refer to it as talents of gold, silver or bronze. Maybe these could be minted into coinage in a city.
Cavalry units could produce hides and possibly meat as well.