The answer to your first question is yes, young ones that have an understanding of real life economics would be wise to choose the 401k plan. What you seem to forget that a 401k is meant to retain the investments over a long period of time and over such periods, the market has always been a winner.
As to your military pension question, of course the military would be better off with a 401k plan. Right now the pension is based on the Ponzi scheme method of new money into the system pays off the pensioner of yesteryear. There is no investment by the government required as it is for the private market. Where's your back up for the statements you attribute to Republicans?