People are alarmist and speculative because AI's potential is unknown. If the potential of the new blockchain technology is unknown then you can wait and see what happens. But given the stakes with military AI, you can't take even tiny risks; you can't wait and see if your country will be in history books as an experiment that lasted 250 years.
By declining to help the US military, Google engineers take that risk to a degree. But if they participate then they gain enormous leverage: Given the stakes, the US military can't afford to alienate them. I'd hope they can use their leverage to achieve related goals: Agreements banning the use of this technology against civilians, foreign or domestic, and banning sharing the tech with law enforcement. Leverage Congress into passing privacy and civil rights laws protecting Americans against abuses of the technology.
[0] Note that AI changes things in another way: For all human history, military power was tied to population size. In the future, with the right AI and some underground robot factories, potentially a small country could dominate. Maybe Singapore?