The thing with modding is that they can't change the base game itself. Sure they can do some wonderful things with scripting and they can rework the way we look at standard game mechanics such as buildings to give an entirely different feel to the game (ie. province management as opposed to purely city management) but the problem remains that the base game cannot be changed.

So if you cannot upgrade units 'Mount & Blade' style in Medieval2 Total War then there is no way for them to mod that in. Even so, I'm not sure how realistic it would be in any case.