If upgrading units costs 50% of the resources and manpower that it takes to build a new upgraded unit, Then why doesn't the infusion of fresh manpower and resources give some healing to a unit? It makes simple sense. If a unit is at 50% health when upgraded, it should receive at least 25% healing per level of the upgrade. You should also be able to use damaged and depleted (eliminating them from the game) units for the materials and manpower used to upgrade another unit.

To my knowledge, there is no way to combine units. What part of infusing fresh live manpower into a unit to heal it do you not understand? I mean doesn't it make sense that if creating a unit costs 1000 manpower and it is created at full strength, that infusing 500 live manpower into that unit would give strength to that unit? Where else does the manpower go that is used? Sometimes you will upgrade a tanks that require 1 more crew member than the previous model. That is why you would heal only 25% per level instead of the 50% that it costs to upgrade.
If there is no healing for the unit being upgraded, then the resources and manpower to upgrade that unit should be cut by same percent of damage that the unit has.