Tom did mention that's what happens (non-military worlds get "turned into" military worlds for the purposes of the III phase), although it's possible Keldon didn't get in on that, so he just went strictly with the wording on how these work. Namely (ICT from RvI rulebook page 9)
Conquer Non-military World
As an action, the
player may discard
this card from his
tableau to place a non-military
world (O) as a military world (O).
Its defense is equal to its printed cost –2.
Th is cannot be combined with takeover
(*) or pay for military ( O---►O ) powers.
EDIT: Clarified what this "Tom mentions" was
Added (crude) icons via ASCI character set