for a scenario/MOD I am working on, one of the civs begins really strong, but as time progresses, it shouldbegin to wane in strentgh. Can this be done by making the stronger unit upgrade to the weaker unit?

. yes

But since AI hates upgrading, wouldn`t it still have alot of old and powerfull units?

that is okay, so long as they can no longer be built.

And, especially as the other civs´ units get more even with the initial nukers.

What happens if you have powerful units to begin with, but make them upgradable to weaker units that have the same shield cost? Does the AI upgrade them?

No, it´s very stupid. It will probably just let them be and, if it does when using normal units, just disband them when they´re old, but i don´t know how much old.