this is intended to protect the DoD data, but the intention as I read it is to use unknown hardware to securely access DoD data.
not to boot this on a secured DoD system and access insecure networks (things like disk encryption, firewall rules, air-gapped networks, etc would come in to play to prevent this)
if the user has sensitive data on their local machine that is a problem completely separate from LPS, and LPS can't solve the problem (the person can just boot into the normal OS of the box, or boot from another live CD, in any case that data is exposed)