I certainly hope there's more to this story that we're not hearing. If not, this is an absolute disgrace. Hopefully though, the more to the story is not a FF becoming upset that someone in the military was upgraded first.
As a side note I think I remember hearing somewhere that military members are not supposed to travel in uniform if it's avoidable to avoid preferential treatment. I also think I remember they're not supposed to ask F if flying in Y ets. Not 100% sure on these though.