It makes great sense to me that Prussian refers to early German and European history. As you probably know Lawrence was always very enamoured with German history and especially aristocracy - he married into it. In fact by this time - 1913, when he wrote PO he had already eloped with Frieda (1912). He became very close to her family, especially her mother. At this particular time he wrote Prussian Officer, I found an interesting reference to it in one of my biographies:
Baron von Richthofen, I believe was his father-in-law, Frieda's father, for those unaware of the connection. So when he wrote this story the time was very significant. Also, we know how much Lawrence drew on real people and experiences, even those he heard of through others. And we know how he could exaggerate or alter character to suit the story. He also lost many a friend, along the way in doing so, when they might recognise just who the characters were being portrayed. Whether he really fashioned the image of the officer after his father-in-law or altered that image, in irrelevant only in it did depict that military mindset that Lawrence must have keenly observed, even in the diaries. Lawrence was a great observer of life and so I think this passage more than true about the correlation between the Baron and the diary, especially. Can you imagine what Lawrence could do with a diary full of first hand information? His imagination must have gone wild! Also, I believe that Garnett (his publisher) changed other titles and Lawrence was not pleased one bit, in fact he spouted off about it much. Who would blame him?
Now it gets really interesting about the sexual elements in the story. I felt this element might be there all along and a glimpse of that in the second set of paragraphs I posted describing the officer.