Agreed! We love stockpiling ICBMs and stealth drones and aircraft carriers.... but without secure software, none of those things are going to matter. We're spending money in the wrong places because (it seems) we like big, shiny, tangible things.
As for pt.2 -- I'm completely with you on a healthy mix of private & public staff working on defense projects.
As for fixing the perception of the military -- it seems like a slippery slope into hard-headed nationalism.
I don't think the military has an image problem, I think the majority of people have a comprehension problem.
I'd argue the best fix for this is a stronger education -- technical literacy, knowledge of history, respect for the influence of culture, solid foundation in key areas like physics and psychology and (I'm biased here, but) communication.
Right now, as documents from the.. "experimental" era of the CIA are declassified, people are becoming rightfully skeptical of the government. (With the government-business hybrid of neoliberalism, people should be more skeptical of both). People advocating against DoD projects are possibly just an over-correction to this.
We can definitely do without the nutters trying to shut-down projects they don't understand.
But we need more critical thinkers to support vital projects and shut-down projects that infringe on human rights (like the anti-facial recognition groups bothering Microsoft and Google)