Please forgive me for replying to such an old thread - I've been combing thorugh the archives (as site newb's are prone to do...).
We used the alternate rules for medical discharge on a failed survival roll, unless the player wanted to kill off the character and start again. In one case a player decided that his character was discharged for disciplinary reasons, as it fit his character concept - we didn't use a chart that offered alternative explanations for discharge, though it's not a bad idea.
We also allowed "career changes" - your character could leave one service and try for another, subject to making the enlistment roll. Mustering out benefit rolls were based solely on the number of terms in a given service - a three-term Scout who next spent two terms in the Merchant Service didn't receive five rolls on the Merchant tables!
As far as random skill generation goes, we allowed a player to roll the dice and then pick the skill table. Another alternative that I experimented with but never tried was to allow a player to roll a number of dice equal to her character's term of service for each skill, and select the die roll she wanted - for example, a four term merchant would select a skill table and roll four dice for each skill, then the player would choose whichever number she wanted to apply to the skill table. Both methods provide a means of "customizing" a character while retaining the ebb and flow of events over which the character has limited control.
I'm in full agreement with those who see chargen in CT as a game-within-the-game. Rather than a player sitting down and writing a background for her character, she could actually play out an abstracted version of that background. I used to record the dice numbers as I would go, then use those numbers to reflect certain events when I wrote up the descriptive part of my character's background - for example, a merchant who barely survived his third term may have encountered pirates or a shipboard emergency like a meteoroid strike, so I would includes some sort of description of an event in the background blurb of the character.