That's pretty much how I figured the upgrade worked. Elite status is flagged in a different column, so I'm not sure you can go higher than Disciplined with a Military Academy. Uncontrollable/Disciplined/Elite status show up in the unit status on the battlefield, right? That might be the only way to verify the effects.
As far as rallying is concerned, Disciplined units are less affected by normal (not disciplined/elite) units that are fleeing, so it keeps their morale from dropping too low in a chain rout.
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