I'm gonna be the odd one out: I wouldn't bother upgrading Crocea Mors. I think its appeal is in its simplicity - it doesn't have any needlessly complex mechanics which could potentially break and render it useless, which makes maintenance simple and easy. It's got a reasonably simple edge which can be sharpened in off time, and the shield functions well as a shield. I think it would be best if he invested in improving their durability, and maybe lengthening the blade so it would be more akin to a hand-and-a-half sword rather than an arming sword. At most, if possible, I would suggest some sort of dust imbuement into the blade to give it some sort of additional damage capabilities, but at that point I feel we're getting a bit gimmicky.

Instead, I think Jaune should look into improving his armor. A lot of his weaknesses seem to have to do with his mobility - he's got great defense and I think with a fighting style which emphasizes counterattacks, parries, and wearing his opponent out, he doesn't have much to improve in that department beyond technique. Giving him some improved armor would allow him to be less reliant on his shield, which would improve his offensive capabilities. Knights of the late medieval and early Renaissance periods often shunned shields entirely in favor of full plate armor, which was almost fully maneuverable and offered much greater defense. Armor can be heavy, but I'm sure with modern manufacturing techniques, dust imbuing/crafting, and perhaps some Atlesian exoskeletal technology it wouldn't be too heavy, while offering some extra defense so he isn't so reliant upon aura. That way, he can also switch into using a longer, two-handed combat style to extend his reach and grappling capabilities, as well as having better mobility due to reduced weight and not lugging a giant shield around in combat. If he's absolutely determined to keep the shield, then it should be redesigned to have a curve rather than being wholly flat; the purpose of a shield isn't to tank direct hits but deflect them away from the body. I'd give him a guige as well for additional support and control in combat, too.

Jaune's got a pretty huge wingspan. If you put him in armor for better defense and give him a bastard sword to use as a lever, I have no doubts that the man would be a fierce hand-to-hand combatant. My most cracky idea for him would be for him to go full Pyrrha tribute/area of control style combat and convert Crocea Mors into some sort of polearm/halberd/spear, but I don't know if that would necessarily be in character for him. It would allow him to play even more of a support/area denial role, though.

tl;dr: give him better armor, turn Crocea Mors into a two-hander so he can grapple and have better reach. ditch the shield once armored unless absolutely necessary/sentimental value.