The key to a successful system is that everything has a purpose and has plusses & minuses. In a finite tbs, we don't want an endless power curve like an MMO. I'm referring to most games crafting where you learn 50 levels of recipies but only use the level 50 ones. I agree that more advanced items should be desireable, but it doesn't always have to be based on damage. This has a few big advantages: 1. Upgrading older units is less important because they don't become obsolete so fast 2. Those who get unlucky with their starting location can still compete. 3. You arn't forced into an arms race, you can CHOOSE to do something different. If I'm forced to do any research path, then I don't think the game is healthy. If everyone is forced down a path, then it isn't really an option.
here are some examples of how upgrades could be done without the the early game weapons becoming totally obsolete..
spears are a starter weapon with good damage, but maybe they break after 5 uses and need replaced at a city(you could decide to keep paying the repair bill or you could start using daggers and swords that don't break) Someone who doesn't have a ready supply of iron can focus on wood and crank out spear troops
Daggers would do less damage than spears but would be cheap to manufacture and fairly indestructable No repair bills but paying more for less damage would give pause
two handed swords use a lot of iron but are indestructable but no shields
two handed axes use some wood and a lot less iron than swords and axes have repair costs but do great damage, but no shields
Certain high grade irons could be required for magical weapons. Then a player would have to decide: Do I make a lot of lower damage but indestructable daggers that don't use much metal, or do I produce a small number of high damage two handed swords that use a lot of the special metal or do I make axes that use about the same amount of metal as daggers and do the same damage as two handed swords, but have an ongoing repair cost.
I think this type of system provides real meaningful decsions and mitigates the pitfalls of every technology being better than the previous one.
With that said, I think weapons should be kept to a smaller set like club, spear, dagger, single handed sword, two handed sword, single handed axe, two handed axe etc... Weapons would have characteristics like: production time, resource cost, durability, upgradeability (to magic weapons), single hand, dual wild or two handed, armor piercing
I would not tie skills to weapons. Instead of saying a pike is good against calvary, I would put in a skill anti calvary that any unit could learn to get a bonus against a particular unit.