I don't see much case for the privateer role in the industrial age. I'm not sure there's a case for an up-gunned German transport, either. Commerce raiders (at least in WWII) were not transports, but up-gunned, over-ton cruisers and small battleships - the so-called "pocket battleships". Their uniqueness wasn't so much a question of design as of use.
You might want to take a look at this Wikipedia site, Anaxagoras, covering the German merchant raider Atlantis. They caused considerably more headaches for the Allies than the "pocket battleships." The "pocket battleships", more correctly called "armored ships" and now regarded more as a cruiser, were designed as raiders, with the Diesel engines to give them long range, an armament considerably heavier than a cruiser, and speed faster than any Treaty battleship. The French designed the Dunkerque and Strasbourg specifically to counter them, and therefore they helped to touch off the last major battleship building race.
http://en.wikipedia.org/wiki/Atlantis_auxiliary_cruiser
It is worth noting that diesel subs do not upgrade to nucs, either. Subs are broken in Civ3, anyway, but the first nuc-boats used the surfacing hull configuration of diesel-electrics, and only later switched to the now-common teardrop hull (although no hulls were directly converted from diesel to nuclear, to my knowledge).
The first nuclear sub, the Nautilus, was designed using the German high underwater speed hull of the Type XXI U-Boat, not a surface optimized hull. The Nautilus was actually faster submerged than surfaced, as was credited with a top speed of 25 knots, which is pushing it. The Nautilus was basically a GUPPY hull using nuclear propulsion rather than conventional diesel-electric. The teardrop-shaped hull was tested by the US Navy in the research submarine Albacore in the mid 1950s.
With respect to upgrading ships, I was not thinking of upgrading the actual ships hulls, but that fact that a country had already made the investment in crews, officers, and ship facilities, and that you do not have to recruit and train new crew for the new types of ships. That is my basis for upgrading the various ship types.
I do stand corrected on the ironclad to destroyer upgrade, which is definitely a mistake. The ironclad was the successor to the
Ship-of-the-Line, the strongest warship class prior to the Ironclad, just as the battleship was the successor to the Ironclad. The difference between the British Devastation of 1871 and the Majestic-class pre-Dreadnoughts was more a matter of displacement and degree, and not a totally different type of ship. The destoyer, on the other hand, was a new type of ship, originally designed to counter the seagoing torpedo boat with better armament, equal to higher speed, and better seaworthiness, all characteristics that also proved useful in countering the submarine.