Let us know what NMC says.
When I read the crossover checklist and 46 CFR 11.502 my interpretation of the regulatory language indicates that a naval engineer would need holding an officer endorsement as a e.g., Steam 3rd, 2nd or 1st A/E.
Then options 1-4 would kick in.
So my take away focuses on the possiblity that if military engineer applied and obtained a 3rd A/E license early on in their Naval service, then the crossover option 4.120 days observer time on a military ship having a different propulsion mode would be beneficial prior to departing the service. A workable solution.
As NMC is the ruling authority of licensing and credentialing their decision would be final.