This is strange to me. Many universities, including mine, avoid interviewing applicants with a PhD or postdoc from the same institution to which they are applying.
Military officer corps at least comes with a insanely generous pay+benefits package when compared to PhD and post-doc. And the bar is lower and work easier for most positions.
At least in my department, this will not work as long as the applicant's supervisor or dissertation committee members are still in the department. The crux of the issue, in my mind, is that it is hard to have candid and unbiased discussion about a candidate when the supervisor / dissertation committee is part of that discussion.