It didn’t work because status was a factor. When you mix factor with numeric then numeric is the least restrictive. By forcing status to be character you get the results you’re after and the column is now a character vector:
TEST$UNIT[is.na(TEST$UNIT)] <- as.character(TEST$STATUS[is.na(TEST$UNIT)])
## UNIT STATUS TERMINATED START STOP
## 1 ACTIVE ACTIVE 1999-07-06 2007-04-23 2008-12-05
## 2 INACTIVE INACTIVE 2008-12-05 2008-12-06 4712-12-31
## 3 200 ACTIVE 2000-08-18 2004-06-01 2007-01-31
## 4 200 ACTIVE 2000-08-18 2007-02-01 2008-04-18
## 5 200 INACTIVE 2000-08-18 2008-04-19 2010-11-28
## 6 200 ACTIVE 2008-08-18 2010-11-29 2010-12-29
## 7 200 INACTIVE 2008-08-18 2010-12-30 4712-12-31
## 8 300 ACTIVE 2006-09-19 2007-10-29 2008-02-04
## 9 300 ACTIVE 2006-09-19 2008-02-05 2008-06-29
## 10 300 ACTIVE 2006-09-19 2008-06-30 2009-02-06
## 11 300 INACTIVE 1999-03-15 2009-02-07 4712-12-31