The article mentions that the distinctive penis compensation vehicle would be very noticeable in Germany, and it'd be a sign that the driver is with the US military, compromising security... I'd imagine UK plates had the same function.

Interestingly US servicemen are discouraged from travelling in uniform, even domestically, but they do that anyway..

Ah, okay. Thank you for explaining!

I believe they were concerned that Northern Irish terrorists might use the distinctive number plates to target military personnel.

Back in those days there were lots of unfriendly folk to worry about, not just the IRA. Its best not to stand out and paint "target" on yourself!