On whether the dwarf will pick something from a different category:
I do not think so. On the wiki, as I'm sure you've seen, some materials count as a certain armour category- so bone, shell and leather all are under leather. if you set a dwarf to wear leather and they are in the military, they might get bone greaves, a leather cap, what have you. But if they are set to chain, they will not go and get something from the leather
category.
I am basing my response on my reading of the wiki, and on the recommended advice that one gives dwarfs first leather, then chain, then plate, so that they layer armour (although it doesn't work quite like that) (and it is known that plate won't always sit on top of leather) for extra protection....but roll on further clarification!
Also what's a standard military size? Thus far I have no siege equipment (that's what I'm working on currently) and 11 standing soldiers for a population of 70. I've defeated two goblin ambushes so far but have lost two soldiers at both battles (so 4).
this depends on many factors. if you are losing soldiers in ambushes, it sounds as though perhaps they are not trained up as much as they should be in armour and shield skills - recommend that, and producing helmets, gloves and greaves for their extra protection.
also, do you use traps at all? at early stages of a fortress, when your military is relatively unskilled, you can rely on traps to take up the bulk of your defensive work.
i run by the scale of 10% of the fortress in the military, usually, although now in my 100 strong fortress i have just 7 dwarfs in the military. however, they are all either elite or champions...given that my fortress is a bit of a warren, they can be deployed to choke points and effectively hold up even a fairly large siege....