I just recently posted this reply to Tashman:
You can retrain a unit by sending it to a province that has the necessary buildings to produce that type. On the next turn, open the unit training queue screen, then click on the unit on the map to select it and then grab the unit icon in the tray at the bottom of the screen and drop it in the training queue.
This will replenish the unit to full strength and provide any weapons or armor or honor upgrades that the province provides.
I routinely merge depleted units. I try to merge units of similar quality, but you can get 'free' upgrades by dropping an unarmored depleted unit onto an armored one - the combined unit will get the armor upgrade. If you drop an armored unit onto an unarmored unit you will lose the upgrade.
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Don't drag the unit from the map, drag the unit rom the icon tray at the bottom
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