I think that should proof the AI ability to retrain units with the ALX.exe:



You see Taras one turn after the garrison was reduced to nearly nothing by fighting. You can see that all units are full strength. That is first of all impossible to get with merging units, because you will always have a very small unit of each type left.

The red marked units have a lot of experince and are supposingly the forces that fought the Romans the turns before. The last one (yellow) seems to be the unit that has been raised in this turn.

And here is one more:



This is Alexandreia-Ariana a few turns after it has been conquered by Baktria. There had been two MICs, the AS factional one is useless for Baktria, but with the regional MIC they are able to raise/retrain the marked units.

Now, see that all units that can be retrained by this MIC are full strength (green marked), while all those that cannot be raised there (red) are understrength. May be they had raised some of them meanwhile, but cetainly not the silver chevron archers. And there had been no merging only, because that must have - again - left some units understrength. I think that the last two (yellow) were raised since conquest because they seemed not to have been part of the conquest force.