Having segregated “frum” units should be seen as an insult. It means you are fit to die for the army, but not fit to be seen or promoted. The best analogy would be to the famous Buffalo soldiers (“colored” regiments) of the American army that existed from the Civil War through World War II, or the “native” or “colonial” units of the British army (both George Washington and Moshe Dayan served in such units). One should note that neither Goerge not Moshe were known by history as having been enthused by their love of their respective King Georges.
To say the army has changed, the command structure and most units would be frum (i.e. a ban on pritsus, enforcing yichad and negiah, all food being strictly kosher, all work schedules based on Jewish religious observances even if there are no frum soldiers in a unit, etc.), and perhaps having some “special” units for hilonim who while being patriotic zionists just can’t stand frum people.
Almost all gedolim, including many of the “zionist” ones, believe that yeshiva students should be exempt from the army since the work they are doing is at least as critical to national survival. Depending on politics, some gedolim believe even Baal ha-battim should refuse to serve in the army either because the army is anti-Torah, or because the Medinah is constituted contrary to halacha.
If there is a change in policy, we will see the leading yeshivos demanding that they be allowed to sponsor hesder programs, and we’ll see the children and grandchildren of the gedolim joining elite combat units and striving to be officers (and if that happens, you can be certain that exposing your self to naked women will no longer be part of the test for becoming an IDF officer).