I've got two takes on this:
Firstly I think it should be made optional for people to travel in uniform. I'm personally not a fan as it's difficult to relax and No2 blues - God forbid No1s! - just don't travel well. I'd actually resent being forced to wear it when travelling for a variety of complicated reasons, not least I don't like being a walking billboard!
As for other issues - upgrades, discounts, free entry to places etc. I think we're being a bit naive. Similar schemes in Britain would be so widely abused they'd be withdrawn in days in a similar fashion to the Blue Peter badge wearers trying to get into a zoo en masse. Or can you imagine LCpl Bloggs and his mates from 2 Para showing restraint in BA's First Class Lounge Bar? As a race we're programmed to take as much as we can and pay as little as we can, unlike the Americans who - perhaps programmably - follow the spirit of their privileges by not kicking the ass out of them and, on the whole, self-police themselves. If you've ever tried to get a Spam to get you a case of beer from a UK BX you'll know what I mean - compare that to a tab-smuggling squaddie from BFG.
Where we are missing a trick is by utilising our combined buying power for proper discounts - not those published in the Forces Discount Brochure. If we were organised - some might say by a federation - we could be a fairly powerful economic bloc and could almost certainly negotiate substantial discounts for things like car insurance, just like the civil service do already.