Anybody remember Sword of Aragon ?
It had limited unit types: infantry, archers, mounted infantry, horse-archers, knight, and 5 kinds of heroes. Each of those could be equiped with a huge variety of equipment. Infantry could carry swords, pikes, halberds, javelins, etc, etc, -- even crossbows or slings. Some equipment could only be accessed by units with extra experience. Most exquipment could only be carried by some unit types -- no plate armor for archers or longbows for knights. Experience could be bought by training or won on the battlefield. Units could be re-equipped whenever they were in cities.
So, toss in a few more basic unit types (flying units?), and replace the "unit design" screen with a "unit equipment" screen. Unlike SoA, have a way to bypass the busiwork if you don't want to do it. Maybe just have the default for the next unit you create to be equip it exactly like the last one you built of that type. As soon as a unit is completed it jumps you into the equipment screen, with the values you used last time filled-in. Maybe also allow equipment templates to be saved & called up.
Then there are separate buildings/research required for creating the basic units vs the research/buildings required to make the swords/leather armor/plate armor/mithril/unobtainium/whatever, etc. Recruiting requires few resources -- just the warm bodies, time and a little money. Equiping can require as many resources as devs can think of. (For evil factions, the bodies don't even have to be warm, but I digress 
Then a Death Knight is just a knight with special equipment that a knight can't use until he gets lots of experience.
Experience could still be purchasable, either directly as in SoA (but make it really, really expensive for higher levels), or by building special advanced training facilities (like Shogun Total War). It was too cheap & easy in SoA. But we shouldn't have to wait till the knight has made 8,000,000 kills before he can become a death knight.
All the "what if I don't have the resources" issues go away. Build the knight anyway. Equip him (temporarily) with a club if you don't have metal for a sword. Leave him on foot if you are out of horses. Since the issue of equipent came up, all my years of programming experience have been screaming at me that all the solutions being discussed had too many drawbacks, and it was time to pull back and change the basic approach.
The finances in SoA were simple. If you had the money for it, and the unit had the experience, you could equip it. If you un-equiped it, you got all the money back. Equipment was created instantly and automagically. I personally would be happy with that system, extended to include all the various resources. I would guess that many frequent posters would prefer to make the equipment separately and warehouse it, but I would rather avoid the micromanagement. But maybe you shouldn't get quite all the money back...
Don't go too overboard with the equipment categories. Just helmet, shield, armor, a wide range of weapons, and few rings/necklaces/items-in-pouches, etc. Regarding armor, I don't need to deal with separate gloves, greaves, shoes, and things I've never heard of.
I have no particular opinion on whether units should be re-equipped only in cities, or also out in the countyside (like GalCiv 2, except maybe make it slower away from cities). I would prefer not to do the micromanagement of having to move the unit to the specific city that has the resources.
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Ps: it scares me a little that equipment and unit-creation have gotten so much attention in the dev journal and the forums, and the combat system as described in the Oct 21 dev journal post seemed so over-simplified. Other way round, please.
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[edit] there might be separate types for swordsman, spearman, pikeman, etc, but I really want to get away from the GalCiv-2 syndrome of spearman with the tech I had last turn, spearman with the tech I have this turn, etc.
Also, forgot one SoA unit type, "mounted infantry", which anywhere else would be called ordinary cavalry.