I have not seen it in .98, but city levels would get messed up in .952 when a city population rose too quickly from disbanding. 

You know... get a few darkling villages, mass darklings, and disband them in the brand new city you just stuck near the enemy border.

Oh, and the level number is often the wrong one.  The last time I had it happen, a level 1 city went to level 4, although it should have only gotten to level 2 with the population I had added.

I assure you, disbanding darklings worked as recently as this weekend.  And I am sure I had the most recent version, because I had no time to play for months before that, so I had to re-download the game.  With a bit of luck, I may actually have a save with the problem at home.

Hell, disbanding pioneers works in the latest version.  Of course, it's a bit too costly to use.

Can't someone who has accept to his PC check it?  It's not that hard.  Rush a pioneer, then disband it.  If the population of the nearest city goes up, disbanding works.

Then train five, group'em, and disband the whole army so that the city passes an upgrade point.

Before comment said, I just tested in 0.98, and I did get an additional 3 population in my city by disbanding a random NON pioneer unit (unit with staffs and weakness, costing 20 production per unit).

So you can add units to your city to some extent.

Sincerely
~ Kongdej

Level 49 now for only 3 more population (229 level 40, 232 level 49).  With 0.98. Have save game if it is of use. Will attempt to repeat.