Is there anyway to swap around magic items between the units in the game (like in Dark Omen) or are they locked to the unit that looted it?

As far as I know they are locked. As such never pick up a magic item with a unit that will leave at some point as they will take it with them.

Btw, if I remember correctly, there is also a limit to how many magic items a unit can have. So plan carefully. Another difference compared to Dark Omen is that a unit can have two items of the same type such as two swords which was impossible in DO.

Not in-game but according to instructions found here:
http://www.cheatbook.de/files/warhaedrat.htm

it's possible to edit units' config files to do this.

Yep its a risk picking up any magic item, any unit thats picks up and item has it until the end of the game.

Some units can be completly ruined by them, for example if allor/ any other mage picks up an item which nullifies all magic.... they will not be alowd to cast spells.

So i would reccomed saving before each battle incase you pick up an item that would be much better on another unit.

Saying that the most fun I had when Allor became nothing more than a one life ceridan, go for glory allor you can stop those pesky skaven with your stick!