I am pretty sure when they talk about the Imperial Navy, they are talking about the Imperial military in general. You never hear them mention the Imperial Air Force or Imperial Army, the Stormtroopers are all soldiers on board Navy vessels, makes sense they'd be considered Navy.

Technically in our world, Navy operates at sea, but in the SW universe it has clearly been expanded to be space operations.

Maybe it is just me, but I think it would be silly to conscript officers but mass produce cloned humans for your regular joes. Why wouldn't all the officers be clones too? You have to admit, this whole mess is very poorly thought out. If you have the technology and resources to makes vasts armies of clones, you'd obviously want to aim for mass producing the best soldier you can possibly find (obviously, judging by the general intelligence level of a Stormtrooper, the Empire and I don't see eye to eye on this one), so if you are able to mass produce the perfect soldier, why wouldn't you simply use this same perfect soldier for your commanding officers as well?

Maybe Lucas was just as retarded back then as he is now, only back then retarding things like this clone nonsense was simply not known by everyone. The whole idea of a clone army sounds cool, a military that consists entirely of the best soldier they could get their hands on... but that is clearly not what we see on screen, and this just makes the Empire look way more incompetant and stupid than it should.