Yes mine uses his weapon too. Now it is only the warnings that state his gear is no longer good for his level, I cannot see anything else that does. His stats look pretty good to be fair.
I have cybertech so I could make some green moddable droid armor and gear him up via that route, but if we pay for this, we should at least get armor with him that's scales to the level he comes in at
That'd make too much sense. Here at Bioware we strive to take the illogical route and charge you more for less.