The 12 hours time is a convention that is very dominant in the USA, but elsewhere we often have 24-hours clocks in the airports, at the television, or in the trains. We also have digital 24:00 wrist watches.
A lot of people in many countries refer more easily to tea time as 16:00 rather than 4:00 PM.
Additionally, the fact that the SL client clock uses a 12 hours clock makes it even more difficult to convert from and to PDT and PST when someone is in some other time zone.
Finally, a time like 12:15 PM is simply not understandable. Is it a quarter past midday or midnight? We did a test in a French group, and got about 50% of each answer...
Therefore, in the general preferences tab, there should be an option to set the preferred time format (12 hours or 24 hours). Or it could be retrieved from the system settings.
If no such setting is envisionable, 24 hours clock should be used for everyone in the client, as it is simpler than the AM/PM convention, and makes conversions easier.
[To clarify: I'm all for this. The 12-hour clock leads to a lot of confusion. By the way, there is nothing military about the 24 hour clock, it's just more logical :D ]