The weapon is just levelled, but I still found it kinda amusing when Ulfric handed me three Elven weapons in a row. And they say he's racist against elves...
I also got a Daedric sword around lvl 32 or so, but reloaded without saving for some obscure RP reason I don't even remember - then I had to reload at least ten times to get a decent weapon after that, he insisted on handing me crappy steel swords.
I agree about General Tullius and he's a tough old guy. At Level 57, I got a Daedric Sword of Vampire (Absorb 25 Health). I gave it to Argis and he just svcked the health right out of those draugr we ran into last night. For the first time, I'm playing the higher levels and enjoying some of the great gear and abilities we don't get until late in game.