@Bomb: Suppose I said to you "Men and women visiting the pool use the men's and women's locker rooms to change."? Granted, the word "respectively" would be more precise there, but would that sentence indicate to you that men use the women's locker room to change, and vice versa?
Within the context of the game, where only the attacking player can "declare" attackers and only the defending player can "declare" defenders, it is reasonable to read "the attacking or defending player can kneel a non-participating character with a Naval enhancement on the matching challenge icon and declare it as a Naval attacker or defender" as "the attacker declares attackers and the defender declared defenders." Again, while the word "respectively" would help, it's pretty much the same as the "men use the men's locker room and women use the women's locker room" interpretation of my example above.
There's nothing technically wrong with the interpretation of "the attacker declares attackers or defenders and the defender declares attackers or defenders," but there's nothing wrong with my interpretation, either. I just think that within the context and specific use of the word "declare," it makes more sense to impose the time-honored understanding of "attackers declare attackers, defenders declare defenders".
But I could be wrong. We should probably as FFG for its official interpretation of a sentence with such ambiguous conjuntions.
@ Flintac: Yes. Khudzlin's interpretation of counting Deadly participants by controller rather by side is correct. I was too focused on the "you can't jump in a Deadly character and have it count for another player" thing to clarify the additional step in reasoning that while it doesn't count for the attacker or defender, it counts for "you," which can end up screwing the attacker.