Yes, wands are also leveled up this way. It's just a bit more tedious – you still lose your army because you can't give the Arrachne to the mage. But in principle, a hundred Celestial Warriors plus the rest of the horde can hold out for quite a while. Then you exit the game, reload, and do it all over again.
It seems that the issue of leveling up dynasty weapons has been resolved thanks to a bug in this mission.
