I think ultimately, it boils down to what precisely was the mission statement for the Duchy naval forces, and whether or not it was funded by the Ducal level government.
That's the beauty of my approach, even if I do say so myself. It all depends on local circumstances. You want a duchy navy that's a joke? Give it a duke that's been neglecting it for decades. You want one that'll subtly baulk the IN when it tries to interfere with "local enterprise"? Have the natural rivalry between them degenerate to outright feuding. You want one that's configured to hunt down Vargr corsairs across the border? Give the duchy an active, enterprising duke.
Of course, there will be some broad limits. There are things the Emperor won't stand for, and the dukes work for the Emperor. You're not going to find a duchy navy going commerce raiding against a neighboring duchy. Not openly, anyway...
For me, the Imperial Navy was the source of the BIG GUNS while the Subsector Navy was more concerned with the lesser guns (so to speak). There wasn't often a need for "large ships" in the day to day concerns of the Subsector Navy, and if there ever was - one need only apply to the Imperial Navy for use of a special task force to handle what ever it was the subsector navy could not handle.
Always providing the local Fleet Admiral would agree that the task was suitable for the IN to handle.
What concerns me overall - relative to canon, is the fact that in the early years of the Third Imperium, Admiral Plankwell was able to scrounge up a naval force and hit the main capital of the Third Imperium. How was he able to do this?
He ordered his units to follow him and they did. Evidently he was a charismatic type.
If he had to use nothing but Imperial forces to handle the task, one would imagine that the Iridium Throne would have had advanced warning as Imperial Units went off-line and gossip, which seems to travel faster than the speed of light, would have given advanced warning.
We don't know enough about conditions at the time to say for sure. Maybe Olav outran the rumors. Maybe Jaqueline had all the advance notice in the universe, but was unable to get her act together.
Also, we've no idea how the IN was organized back in Olav's days. All we know is that there has been no Grand Admiral of the Marches appointed since Arbellatra (At least, I think that's canonical, but I couldn't provide you with a quote).
With Subsector Navies on the other hand, one need not be involved in utilizing Imperial Naval ships, but instead, make use of Colonial Fleets (planetary Navies capable of jump) as well as subsector naval forces (likely to be Cruiser sized and/or destroyer sized ships and organized accordingly).
Actually, I have a notion (pure speculation) that member worlds aren't obliged to furnish ships to the Imperium unless a state of emergency has been declared. During a state of emergency, the duke would be able to imperialize units of planetary navies, but doing so requires him to assume payment for the imperialized units for as long as he keeps them.
Planetary navies may voluntarily engage in joint exercises and operations with the duchy navy, of course.
Plankwell took a major gamble, and if you treat subsector naval forces as being local defense units that are capable of being "imperialized" for the common defense of the Spinward Marches -
In this case, the use of 'subsector naval forces' instead of 'duchy navy' is correct. Both the duchy navy and the planetary navies would be part of the local forces -- raised and maintained at a duchy/planetary level -- but they're still seperate organizations.
...his drive on the Capital probably stripped the bulk of ships away from the Spinward Marches, leaving it relatively defenseless.
Probably. Almost certainly. Of course, the moment he took those ships away, the dukes no longer had to pay for their maintenance and they could begin building new ones. Still, it would have been an anxious time for them.
In any event - if you treat the subsector navy as its own organization, and it was originally given to the local governments prior to the civil war, it could very well be an issue later on, that some mid-level functionary decided that the reason we're having this civil war is precisely because of the freedoms granted to the subsector navies. Problem with that line of reasoning is, that not every single "political entity" within the civil war would have adopted that measure. In fact? Each imperial naval cluster would have by neccessity, had to "imperialize" their own local units in a fight for survival against the other political entities in the ongoing civil war.
Five hundred years is a long time, even in Traveller (where, it has been said, it would correspond to 100 years of real time

). Things could have changed many times in between (or at least a couple of times). In any case, i'm not looking for an excuse to eliminate the duchy navies; I'm trying to convince you guys that it would be a good idea to keep/reinstate them.
Unless the "change" occurs just after the fifth Frontier war, but just prior to the civil war [Rebellion?] - it doesn't make sense to reorganize much of anything relating to the original High Guard subsector navy.
Despite the fact that I have to admit that it's
possible that duchy navies were phased out between 1106 and 1116, I do think that MT was a genuine retcon. Which is why I'm advocating reintroducing the duchy navies as another retcon, i.e. to say that they were there all along, just not mentioned at all by MT sources. Ignored, not non-existent.
Just like a merchant marine character could end up starting out as a free trader and then end up in a mid-level or high level mechant outfit, so too should those officers within the subsector navy have been able to switch from the subsector naval forces into the imperial naval structure - *IF* the subsector navy and imperial navy were one and the same pursemaster (ie payroll entity). This was never done. For me? The subsector navy should be funded separately, and be its own separate mission based organization. If anything should be following the small ship universe concept, it should be the subsector navy. But, that's just my opinion...
It seems to me that even if the IN and the duchy navies and the planetary navies are separate organizations, it should be relatively easy for personnel to transfer between them. If there were a separate NATO army, I'm sure it would be recruiting (and borrowing) from the armies of the member nations.
Hans