Good point: graphics have more impact than game mechanics and will spark a reaction every time.
On the other hand, no Nationalist/Guard unit should be an upgrade or conversion of a regular military unit. In every case they were derived from non-military organizations and created to supplement or supplant the regular military because the fascists wanted armed groups utterly loyal to their movement rather than the state - before, of course, they gained control of the state themselves. Even after becoming the state, though, they kept much of their 'guard' independent of the regular military - Mussolini's army even had separate 'Black Shirt' fascist units alongside its own infantry in the infantry divisions, while of course the German SS were kept separate in administration and control from the German Wehrmacht.
So, no 'upgrades', just Additional Units. As @Alexander's Hetaroi
posted, maybe make the graphic unit icon a combination of, say, a police-type armored car and marchers with banners and Chartreuse, Puce and Vermilion uniforms to indicate their distinctly non-military, street thug origins.