That's the maximum amount to be set aside. If you have less than that, it uses less than that. I tend to set luxuries to the max the city would use even if the city doesn't produce that much, unless told to do otherwise.
Range is worth double the normal stat value, Move is worth triple. The reasoning is that range can get you free attacks, but enough move can make you invulnerable regardless of your other stats (hit and run tactics). Loot capacity is not factored in either way.
Sorry, no mixing up units per se. You can unequip the weaponry from the veteran unit and give it to the rookies instead. That should reduce veteran cost (and strength) and increase rookie cost/strength consummately. Or you can just disarm your veterans and weaken/cheapen them as well. Be aware that range, move and loot cannot be upgraded by gaining experience, whereas all other stats can.
Surrender mechanics (as Dias has demonstrated) are now in and at full capacity. Right now, units will only surrender outright if they are completely outpaced by a unit with a significant movement/range advantage (i.e. no matter how much they run they will not be able to escape, and cannot strike back either) or if their chances of survival/victory drop below a certain breaking point.
That breaking point is currently set to 20% likelihood of making it out of the conflict alive. At lower than 20% survival, units will flee. You can set the breaking point for your units to higher or lower if you wish, but this is also the point where they will just start fleeing from the conflict if they can successfully escape.
It was 22%, but when I ran a pre-turn sim of what would happen when Tiger's raiders met a lone unit of Tylonese raiders (tip, filius: stock up on units for a couple of turns until you have your full complement of 3 units if you plan on taking on Tiger again, otherwise explore in a different direction and try raiding someone else - making the military school will allow you to recruit two units a turn) the Tylonese raiders immediately defected to Tiger because they were that outclassed from the very beginning.
In retrospect, that might have been the smart thing to do after all. The fact that I actually named them should've been a clue as to their relative power, but Tiger's current stats (bear in mind, after taking the spears from the Tylonese) are as follows.
Tiger's raiders: A1/D0/M1/N1/R1/S1/F3/H4/C4/L3
They can kill in one hit because they got lucky levelling up, but they actually had a disadvantage on to-hit against the Tylonese defenders in that fight (who had +2 attack from spears/general and +1 defence from the local terrain).
Two equally-equipped and experienced units of the same type start combat with a 42% chance of success each (because defenders are favoured in combat calculations). As units get wounded or allies abandon them, this changes (because it takes into account the total disposition of forces). Fleeing and surrendered units are not taken into account.
You can set units to flee at 0% (that is, never surrender). They will quite happily fight to the death, but expect it to happen quite a bit if you're putting them in that sort of situation. The surrender/flight mechanics are there to (usually) protect your soldiers' lives.
Not in yet, but eventually along the same lines; bribery of units. That'll probably require Diplomacy or somesuch. Maybe a downpayment of two or three times their upkeep in Wealth should do it.
Edit: Additionally, horse farm retconned to tile J. Makes no balance difference, so I'm allowing it.
Edit 2: Voting locked; system stays as it is with current bonuses to production. I'll work on updating the status screen to reflect said bonuses properly.