I still lean more toward the second option: that the weaponry in terms of power equals the technologies of the Ancients (meaning missiles and flamethrowers are slightly stronger than those in modern technology and the near future); besides, it seems the goblins' blasters are indeed from MM.
Although both options are plausible, I think that in the original AB (in which everything was completed except for the last campaign map), the plot intended for Forge to possess weaponry comparable to the technologies of the Ancients, while balancing it in-game with a giant cost and small growth. But the first option (with Ancient technologies at the seventh level, and the rest not drastically higher than modern Earth equipment) is also quite interesting and fits in.
Added after 2 hours 14 minutes
With the cancellation of Forge, many aspects of the "Armageddon's Blade" plot changed, not just the main storyline. But in the pure AB, with a separate disc, many moments reminding one of Forge remained. More details on this are in the file below.
http://www.sendspace.com/file/nkq0ec