I'm not sure whether I've got any modernized militia near your front line (vs. militia that spawned as modern-ish b/c I've maintained high militancy this game longer than I probably ever have before - my
capital spawned a 2.4k unit last turn
and I'm pretty sure it wasn't a Volunteerism freespawn [Spoiler: it was]), but yeah, I've only scrapped units entirely in the forlorn hope zones getting overrun by Hornstein. Which is nice b/c of how strapped for PP I've been this whole game, and how oversized my borders are; not needing to spend PP to get new (or "new") units has been very welcome, and militia works okay fighting freefolk and wildlife as long as they're not default models.
Take your depleted militia unit (or painfully archaic militia unit) back to your SHQ. Open its unit admin page and look at the TOE to see what it
can take - be aware that "militia buggies" fill a light armor slot, unless that got fixed recently. If you've got some utter trash you want gone, scrap those subunits, taking care to not empty the unit. Hire whatever replacement units you want to second to your militia, then open unit transfer, select SHQ as the donor and the militia as the recipient. Transfer all appropriate regular-army reinforcements into the militia unit. This is a one-way street, mind you; you can transfer them back into the SHQ or other militia units, but those subunits will now always be militia troops. And viola, your militia unit is modernized even if it still can't benefit from OHQ leadership or postures.
If you were tricky about it, you could do militia replacement in the field by sending regulars out in "replacement" units and transferring reinforcements out of them, then reinforcing the "training" unit. That's a bit more annoying b/c you can't just recruit arbitrary models into a non-SHQ unit, and you can't take non-SHQ units down to 2 or 1 power - they need to be 3+ or disbanded. Still, if you're using the unit as a long-term training brigade, that's probably a decent safety measure to make sure you don't accidentally disband it.
[Edit: you'd asked about how the engine picks militia models. I'll offer up the 2.4k (Volunteerism extra) unit I got last turn as a lone data point. I wanna say all five models in it are from w/in the first 30 turns. Weight is towards older models, but the longer the game goes, the more that shifts. Oh, and I just realized my labels are confusing. V1 & V2 are Mk. I of those design lines, and V3 & V4 are their replacements, but that was the order the models were made in.]