You can dismiss any, or all  of your troops as you desire, whether the idea of dismissing lower levels to reduce food costs,and so increase power is sound, is another topic.

Of course  for the same amount of food consumption you can have twice as many T1 as T2 and if you are smart and well advanced you can increase food production and reduce  consumption considerably.

To dismiss any troops  you need to go to the shrine of Odin and click on the picture and follow the instructions.

Yes even low level troops can be upgraded if you research the knowledge.

The basic way is to consult Oracle then military.