I'm finding that there is very little difference between 4 and 5 star versions of swords, especially since the attacks/range is usually unchanged (as opposed to the AOE boost a bomb receives at 5*). So the AC ends up doing approximately the same damage as a Leviathan, and in some cases slightly more damage due to differing depth nerfing. The difference is negligible though. One should be able to use an AC to go to The Core as well as one would use a Levi.
Even connecting all three hits on a charge attack, the AC only does about 7% less damage - a difference less than one sword swing. Depth 27 AC Full Charge Attack 1029, Levi Full Charge Attack 1104.
If you have the CR/CE to upgrade, go for it, the aesthetics alone are worth it :)
I expect that in The Core, the Levi will continue increasing in power and the AC will start decreasing; in the same way that the Tempered Calibur 3* loses power rapidly in Tier 3.
I doubt that is a mistake. 5-star gear is not properly powerful unless you use it in Tier 3. Using 4 and 5 star gear in T2 makes it so that they perform almost the same, in this case a point or two of each other.
Culture is actively working on those values. They may change, but it currently follows the usual trends in this game.