If this were truly to be an effective addition, perhaps it could be tied directly into the looting that is done by your peasants during or after a battle...
A simple way of doing it is that besides getting resources from looting, you also pick up a certain amount of Experience Points that you can allocate to any unit or battalion you desire.
Now I know that sounds hardly realistic, but, in my mind, the experience points would take the place of any equipment, as the points are used to upgrade a unit, which is also the goal of equipment. So it kind of fits.
The one fault in this concept is the possibility of more elite units/battalions, as players could focus their looted experience points on one or two units/battalions. This would mean that the experience of a battalion/unit would not be representative of experience earned during actual combat.
"Yes... I am writing a book. So far I have the page numbers." - unknown author.