Another question. Does leveling up his minor skills like sneak, mysticism or alchemy do anything worthwhile?
Or should I just stay with the basics like armor and weapons?
Okay, the skills system:
Julan has nearly the same skills you do, in terms of levelling them up, but he lacks Marksman, Acrobatics and Athletics. This is because they are set to certain levels by his scripts - e.g. acrobatics needs to remain high to save him from dying if the player leads him off a cliff, and his Marksman level tells him whether to use ranged or melee weapons.
All his other skills are trainable, and are all linked to a statistic, e.g. Destruction is linked to Willpower, the same as it is for the player. However, not all his skills are linked to the same attribute as the player, since I left out Speed, since that's preset by his script, so he can follow you properly. Therefore, I had to assign all the skills that normally use Speed to other stats, and I changed a couple of others too, to balance things out a little. I can post a list, if anyone cares, but it's pretty logical.
After you raise his skills, the next time you rest, his stats, max Health and Magicka will be recalculated from his skills. You don't need to max out every single one of his skills to max out his stats, but obviously you'd need to train him a lot. His skills and stats are all capped at 100, they won't go higher. (unless fortified, but that's another matter, and BTW, don't give constant effect items to companions, the Morrowind engine screws them up for some weird reason, and they might start working in reverse!!)
So: why would you want to bother raising stats like Mercantile, or Alchemy? Well, because their level contributes to a stat: e.g. Alchemy raises Intelligence, which directly controls his max Magicka (3xINT). His Sneak skill contributes to Agility, and also, well, affects how good he is at sneaking! The Personality-linked skills are certainly the least crucial (Speechcraft, Mercantile, Illusion) but if you have him use a lot of Illusion magic, you might boost it, as a high Personality will make them more effective. But it's up to you - I never intended Julan to be wildly charismatic, so a high Personality isn't really in character anyway!
He has major and minor skills, these will get more points from training, so are easier to raise. Did you notice you could lend him skillbooks, too, if you find them? (topic: "good books", which you can get in bookshops, if you haven't already) He won't read everything, as he won't read skillbooks for skills he can't raise (Athletics, Marksman, Acrobatics), he has a personal aversion to Vivec's Lessons, and you need to give him the first volume of a series before he'll be interested in the second. But most others will work, and you get a mini-reward for getting all the volumes of long series for him. The snarky book reviews are free!
Something I thought of recently is the idea of adding "teachable moments", i.e plot/event related skillraises for him. Like, he gains points in alchemy for helping you with Ajira's quests. Or losses even - a random loss of a few points of something Intelligence related if he gets himself drunk a lot. Suggestions welcome!
I should really put all this in the FAQ, I don't think I ever explained it fully before!
ETA again: Just wanted to add a little thing that happened.
Was in a Dwemer ruin with vampires attacking. Got them all (I thought).
All of a sudden I'm registering damage...getting hits from somewhere I can't tell.
Julan's kickin' butt with his Dwarven crossbow and I look where he's shooting and it's a vamp with a close to 100% chameleon spell using a crossbow..
Wow.
Saved my bacon.
VERY cool.
Heh. I love the little story-moments you get with companions, and I especially love when people share their Julan ones with me!