Xokke_SuG
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You could write in the description of the upgraded unit that their squads include amnestied war criminals who train the soldiers of these squads, and they engage in looting and pay money into the treasury so they won't be sent back to prison.
It's better to write something like this.
Miner.
Even in the underground kingdoms of the dwarves, there is crime and lawlessness, and during difficult wars or internal conflicts, all members of the criminal world emerge, wanting to get everything easily and immediately.
Those who fall into the hands of the authorities are sent to unbearably hard forced labor, where they mine and smelt ores day and night for "nothing," and all the income goes to the state. Living in such harsh conditions for decades, miners can boast excellent physical characteristics and a complete unwillingness to work anymore. During the war, they have a chance to receive amnesty by joining the militia, which they take advantage of.
Miners are strong, hardened warriors, ready to break the resistance of anyone, even the most dangerous enemy – they are one of the strongest pillars of the dwarven army, but their weak weapons do not allow them to fight on equal terms with other troops.
In principle, everything here is quite justified. And there is no need to twist things. As for the upgraded units, you can say that "the best miners receive normal weapons from the state and are released from work, etc." And regarding the lack of retaliation, it is quite in the style of marginal dwarves to discreetly stick a blade into someone's side