I've only found three weapons so far, and none of them go all Gradius on you, even with upgrades. Each weapon upgrades three times (horrible memories of Blaster Master Overdrive), but getting hit doesn't severely downgrade them. You just lose some weapon XP. If you JUST hit level 3, you'll get knocked back to level 2, but not to the BEGINNING of level 2, if that makes sense. Since enemies drop weapon XP like candy, it's very easy to bring your level back up.