I definitely see valour upgrades working for retrained/re-equipped troops, with a +2 valour boost when province bonus + master facility bonuses are added together. The only time it doesn't work is the first year the master facility comes on line (ie when you start training a unit the year before the facility is completed), which is odd, as armour or weapon upgrades at that time DO work. The one thing I'm not sure on is when a unit with earned combat valour is retrained, whether the bonus is added to that or not.

Morale bonuses I have no idea about, as by the time I get to look at the battle F1 display I can never remember which unit has come from where, I just see that some units have better morale than others I just assumed it works like the other upgrades.

As to what units I tech up, well right now I'm still on the Vulgar Bolgas in XL, and my buffing is concentrated on the bashkorts - master spearmaker for valour, mosque and ribat for morale, armour and weapons in selected provinces. Including a couple of provinces which have weapon upgrades but no armour, for my desert army.

In other campaigns, I like to use swiss halberdiers, so Switzerland usually gets max armour and up to Cathedral for morale (then even standard halbs will stay and fight ) I also often have a buffing province for bodyguard units (though I never train them, but I do like to get my Princes the best kit available). Otherwise it depends on the faction. For Italian factions I like to buff my Italian infantry, for Turks it's saracens and Ottoman infantry, plus Turc horse archers. With the Germans I like to buff up my mounted X-bows (in one campaign I had a unit of these with good weapon and armour upgrades, worked up to valour 8 over many years, and they could thrash Katanks in melee!)