Even if you are right about MOD possibly having a case, and I am certainly not accusing you of being wrong, it is surely a decision for the Information Commissioner (IC) to rule on - I am sure MOD will make their points forcefully enough!
I've no idea who makes the decisions, maybe the IC was consulted? Maybe not as that would seem like overkill given the number of "UFO chasers" and other mentalists they have to deal with - DV could probably appeal to the IC, then he could see if the IC agreed with the MoD. If you read paras 3 and 4 of the guidance I found, I have a feeling......