They weren't equipping them, they were hiring them. There is evidence that some vargr would have been at a higher TL than the Vilani...
Vargr in Gvurrdon Sector stole TL-12 gear from the Zhodani, including (explicitly) Jump 3 drives, in -2450 (AD 2069). This was outlined in the CT Vargr supplement, so it's canon. Thankfully for the human race outside of Zhdant, the Vargr did not appear to have acquired meson gun technology from them, as things might have gotten really ugly, really fast, if they'd had.
Admittedly, Gvurrdon is at the opposite end of the Vargr Extents from Vilani space, and the jump topography is fairly challenging in between, but J3 drives ought to make interfacing throughout The Extents significantly easier. And, knowing the Vargr, I don't imagine they have ever been much good at keeping military or technological secrets from one another.
You don't necessarily have to have more advanced weaponry, just the imagination and ability to use existing ones better.
The Vargr, as a rule, do not appear to really consider conquest for conquest's sake to be a worthwhile goal, which likely is the reason why they only managed to yank about one-fifth or so of Vilani space away from the disintegrating
Ziru Sirka. Once they got to the more populated and defensible regions around Vland and Lishun Sectors, it probably just was not worth the blood and treasure expenditures for them to push on further.
The Vargr were, and are, always more of a social than a martial danger to human hegemony. But even that is bad enough and, critically, placing their threat so close to Vland itself drew crucial resources away from the Solomani Front, once that opened up a century or so later. It certainly eliminated Makhidkarun Bureau as a threat to Terran ambitions!
Vargr rimward expansion was also hindered considerably by the fanatical resistance put up by the Yileans in Gashikan, Trenchans and Mendan Sectors. But that required committing to a level of genocide that would have made Hitler himself gasp in astonishment.