You cannot upgrade one shader model to another shader model with software since shader models require specific hardware/circuitry to be embedded inside the graphics core.
Of course but newer games requires newer shader models so these games don't work with old shader version. Still those newer games works perfectly in XP even if you got a recent generation of graphic cards, even though XP is DX9... so DX9 doesn't limit anything. Furthermore, 3D gaming does use only DX9 so there is no limitation coming from DX9.