I know about the Dragoon issue, but I'm not going to change it. "Mounted infantry" is just that. You get enough horses to mount up your troops but they don't actually fight while mounted. "Motorized infantry" is the same way; infantry + enough trucks to carry them around. But I don't want to fool around with "transport" units for ground troops; I don't think the AI knows how to handle ground transport and it's a lot of work for a very small realism increase. I'm trying to model the concept as simply as possible with the limits that Civ4 has. You just actually have to think about what you're doing and not upgrade blindly.
Units that upgrade to a mobile defense unit do keep their existing defense promotions, and Dragoons are stronger than Arquebusiers to begin with. If the AIs get to Flintlock, they can always build new Musketmen; they shouldn't get complacement and neither should the player. There are points where I think it should be plausible to replace old units with newer ones that start with more XP.
Units that upgrade to a mobile defense unit do keep their existing defense promotions, and Dragoons are stronger than Arquebusiers to begin with. If the AIs get to Flintlock, they can always build new Musketmen; they shouldn't get complacement and neither should the player. There are points where I think it should be plausible to replace old units with newer ones that start with more XP.