To have bandits that can upgrade their gear you need to set up their unittype so they have upgrade values such as found in CoreUnits.xml. Each unittype will need stuff like this
<EquipmentUpgradeDef>
<EquipmentSlot>Weapon</EquipmentSlot>
<SelectionCriteria>MaximizeSum</SelectionCriteria>
<ComparisonAttribute>UnitStat_Attack_Blunt</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Attack_Cutting</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Attack_Pierce</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Attack_Cold</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Attack_Fire</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Attack_Lightning</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Attack_Poison</ComparisonAttribute>
</EquipmentUpgradeDef>
<EquipmentUpgradeDef>
<EquipmentSlot>Torso</EquipmentSlot>
<EquipmentSlot>Surcoat</EquipmentSlot>
<SelectionCriteria>MaximizeSum</SelectionCriteria>
<ComparisonAttribute>UnitStat_Defense_Blunt</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Cutting</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Pierce</ComparisonAttribute>
</EquipmentUpgradeDef>
<EquipmentUpgradeDef>
<EquipmentSlot>LowerBody</EquipmentSlot>
<SelectionCriteria>MaximizeSum</SelectionCriteria>
<ComparisonAttribute>UnitStat_Defense_Blunt</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Cutting</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Pierce</ComparisonAttribute>
</EquipmentUpgradeDef>
<EquipmentUpgradeDef>
<EquipmentSlot>Boots</EquipmentSlot>
<SelectionCriteria>MaximizeSum</SelectionCriteria>
<ComparisonAttribute>UnitStat_Defense_Blunt</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Cutting</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Pierce</ComparisonAttribute>
</EquipmentUpgradeDef>
<EquipmentUpgradeDef>
<EquipmentSlot>Head</EquipmentSlot>
<SelectionCriteria>MaximizeSum</SelectionCriteria>
<ComparisonAttribute>UnitStat_Defense_Blunt</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Cutting</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Pierce</ComparisonAttribute>
</EquipmentUpgradeDef>
<EquipmentUpgradeDef>
<EquipmentSlot>Forearms</EquipmentSlot>
<SelectionCriteria>MaximizeSum</SelectionCriteria>
<ComparisonAttribute>UnitStat_Defense_Blunt</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Cutting</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Pierce</ComparisonAttribute>
</EquipmentUpgradeDef>
<EquipmentUpgradeDef>
<EquipmentSlot>Defense</EquipmentSlot>
<SelectionCriteria>MaximizeSum</SelectionCriteria>
<ComparisonAttribute>UnitStat_Defense_Blunt</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Cutting</ComparisonAttribute>
<ComparisonAttribute>UnitStat_Defense_Pierce</ComparisonAttribute>
</EquipmentUpgradeDef>
Any unittype that has this tag <CreatureType>Bandit</CreatureType> can be recruited with the special ability.
To change the assassin into a champion I think all you need to do is add this to its unittype <IsChampion>1</IsChampion>