Even if it was really slow and expensive? I understand the potential for imbalance, but have a hard time thinking how probable that might be. If it functions like training, or even at a lesser gold/reward ratio thereof, nations at war would not be able to make much good of it, especially if it could only be done where blacksmiths are present. We separate weapons from armor so players now have 4 ways to improve thier units (training, cohesion, weapons, armor) Even for realms at peace, if you got your unit to 100s across the board, it would be a one time use. The minute you add new troops, just like with training and cohesion, the value depreciates. Besides, it gives nobles in peaceful nations something to do once training and cohesion are maxed.
It may seem small, but I wouldn't underestimate how much players like to get 'perfect' units.