Updated through the latest chapter, 878.
And as for your question, Chrior, I don't know for sure, but since "sui" is one way to read the "water" kanji, and the "gun" means "army/forces/troops", I assume combining them to "suigun" means something like "water army/water troops", and so the fan translations just made that into "Navy" because that's basically what a "water army" is. (For the record, I think "kaigun" is "sea army/sea troops"?) But yeah, I guess they just left the "sui" untranslated and stuck it on the end of "Happo", then translated the "gun" to "Army".
As to why, I'm not sure. Maybe it is like you suggested, to avoid confusing with the other Navy (a.k.a. the Marines). Maybe Stephen could answer it for you in the VIZ thread if he doesn't see the question here?