From the information available, the Deputy was not aware that the vehicle he was stopping was involved in an exercise. He knew that [b]HE[/b] wasn't involved in one. There is no evidence that the vehicles involved bore any distinguishing marking to indicate that they were involved in any exercise, nor was there any indication that any of the participants wore distinguishing markings or identification on their clothing indicating that they were participants in an exercise. No verbal ID was passed either. It seems to be that a key safety procedure, identifying participants from those not involved off the military reservation was omitted or not even considered. Bad move on the military primarily, and the local LE folks, too.
As for the incident as related in the media, under the circumstances he was presented with, the Deputy responded correctly, defending himself from what he perceived as serious threat against his life. Hopefully everyone will learn from this incident.
Something nobody here has considered, though. Suppose the incident had involved an officer who was a knowing participant and the SF guys, out in the middle of town, had overpowered the officer as part of the exercise, only to have a civilian CCW holder, not in on the exercise, come to the aid of the officer who didn't need it. I really think the days of holding exercises involving SF and local LE out in town, in an uncontrolled environment, needs to be seriously reconsidered. Such exercises need to be conducted, but they should occur in an environment where only active participants or observers can be present to avoid unnecessary accidents.