Bandit,
As a far as the military it leaves very small margin for error under our CTA,with the high ground.Thats why if they have a low level abort,the first we know about it is they are well in CAS.Things happen quickly at 500kts.
Thats the joys of being surrounded by class G,and a low level playground.
As far your other point,if they are not squawking,or mode A only,then the controller has no way of telling that a/c is in or out of CTA.We therefore ASSUME that the target is out,unless we have information that it's lost etc.
I have seen the military infringe the CTA,then realise what they've done,and switch off the transponder.They then get out of the CTA quick,then switch it on again.
The only conflict alert I've used worked on mode c readouts,and also a rate of closure.However at ABZ we don't have conflict alert on the radar at all.Got to keep your eyes peeled all the time with mil under the CTA.