I know this thread is done but just in case you see this
I always get e-mail replies, so I don't miss responses.
In hindsight, it seems obvious that somebody in a high position recognized the offensive potential of the internet.
I would also say that if they didn't, they had a risk that someone else would create an 'internet'. Being the first network was probably a strategic advantage to ensure nobody else could dominate the network.
I have no doubt that the Soviet Union was the intended target.
I find it amusing that
The defensive use of the internet (or more precisely, a packet based error correcting network) is easy to see; we can still communicate in spite of fog of war and infrastructure smashage scenarios and all that. The offensive use is only recently becoming clear to me.
I suspect that they didn't really envision how integrated the Internet would become in society as it is today though. Back in the 90s, it was hard to find Internet access, now it's hard to not find Internet access in some form.