a)
If i choose one of those negtive traits...can i still upgrade/repair/overstrenght existing planes/arty or is this blocked too?

b)
Can captured equipment upgraded either to improved version of itself or to german stuff within the same group?

Can be closed, tested it myself.

A)With denied Aircraft you can still repair/overstrength Air units you got as gift/reward/capture/prototype and you can upgrade them to captured(Cache/Reward/...) or Prototype Stuff you got but nothing else.

b)Captured Equipment can be freely upgraded