Confirmed, this is related to number of promotions, not unit level or xp amount. If I switch from militiaman to town guard a unit, it loses some of the free promotions from the Founding Fathers. The turn after, I can at last & again get a new promotion. I then can switch back to Militiaman.
But that's only a poor workaround to get one extra (but deserved and legit) promotion. Past a certain number, you can't anyway use your XPs. I can understand why the rule was set in place, to prevent units led by generals being able to reach epic levels, but that's a bit frustrating none the less
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