<tinfoilhat>
That's how it starts. Next up, they'll report that "sensitive military servers have been tampered with". Maybe it'll be true, maybe not. Nobody knows but them. The defintion of "potentially life and death consequences" will be bent & twisted beyond reason. Then add a bit more propaganda and it's wartime with whatever country they named.
</tinfoilhat>
Those are the risks of a standing army- computers don't change that. The bottom line is that if you want to "play" in the military's back yard, you can't hide behind your computer as if it makes it any less serious.
It's not about China. It's about the military doing it's job, which is the enforcement of political policy by means of violence. There is a broad spectrum of possible responses to an attack ranging from "ignore it" to "nuke it". Computers don't change that.
A more direct answer might be this: What if an enemy hacker was attempting to compromise battle plans for an impending invasion? I suspect the military would try to stop that effort with violence if there were no easier way.
I don't know... Shooting hackers may actually be easier than getting people to pick and remember more complex passwords.
In all seriousness though, security is not that simple. Yeah, what you're suggesting would mitigate risk, but it wouldn't come remotely close to eliminating it. You can end/save lives through hacking, and if you're costing the opposition lives, you should be treated as anyone else would be.
(I'm not downvoting you)