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In my English campaign I invaded france and left them with to cities, I'm at war with the Danes, French and Milanese, and I want to turn some of the French cities into castles in order to build troops from there are retrain those who I lost, but there is just no option to do it, why is that?
Once a city gets to a certain level of development it can no longer be converted to a castle.
Yes, once it becomes a Minor City, you cannot turn it into a castle.
Is there anyway to reduce the level of a city? For example: exterminating repeatedly? Using a console command? Modding the game?
Not that I know of. The city level depends on the wall structure built, and you cannot demolish that at all. Maybe if you mod the structure to be destructible it could work, or it could make your game crash...even if you destroyed it though (via modding and making destructible), you'd have to start over from "village". And I think its possible all other buildings go with it.
Too much effort either way.
And anyway, it'd be really irritating to lose levels of city due to extermination :)
Large and huge cities can't be converted. Minor ones can. Is Caen still a castle? What about Angers, Bordeaux and Toulouse? If you get far enough east, Metz is a castle, and Bern, and Stauffen.