The Wikipedia page isn't very clear in either direction regarding DHS. Based on the description of the Posse Comitatus Act, it sounds like your interpretation would be correct. It says that Posse Comitatus (PCA) limits the federal government's powers to use federal military personnel for domestic law enforcement.

My interpretation of that is that it applies to military forces. The Coast Guard is a military force. DHS, I believe, is not. The reason the Coast Guard is exempt from PCA is not due to it being under DHS. (That's a side issue.) It's because the Coast Guard is charged with a law enforcement mission. It says that right in the Wikipedia article.

And that makes sense too. PCA says "don't use military for law enforcement." US Coast Guard has a law enforcement mission, so it must have an exemption in order to fulfil that mission. Likewise, ATF and FBI are law enforcement agencies (not military forces). So it makes sense that it doesn't apply to them as well.

The big question is whether DHS is a military force or not. I don't think they are. I could be wrong.

If they're not a military force, I don't see the problem with them not being bound by the PCA. The PCA is specifically for military forces.

Regarding the rest of your sources, [2,3,5] seem to confirm that DHS is buying a lot of ammo. But I don't see anything nefarious there. Note that [2] is an editorial (an opinion piece).

None of the sources mention that DHS is purchasing hollow-point bullets. The Snopes page [4] mentions that the SSA is purchasing hollow-point bullets, but not DHS. I wouldn't really have a problem with it if DHS was purchasing hollow-point bullets. The reason hollow-point bullets are banned in international warfare is because they increase the likelihood that a combatant is killed rather than just maimed. A full-metal jacket bullet will maim a combatant so that he is unable to continue fighting, but with a lower chance of killing him. Police forces tend to use hollow-point bullets because they reduce the risk to innocent bystanders (less chance of going through walls or ricocheting). Different tools for different jobs.

Regarding the "hestitate no more" targets, the sources [6,7] don't support the claim that DHS is using them. The first source [6], is an opinion piece. First, let's apply Betteridge's Law [] to the headline. The answer is probably, "No, 'DHS [is probably not] training with practice targets featuring children, pregnant woman [sic].'" Looking at the content of [6], all it really says is DHS buys targets from Law Enforcement Targets, Inc, and Law Enforcement Targets, Inc released a product line that features targets that display children, pregnant women, etc. It doesn't follow from those two statements that DHS is purchasing exactly* those products. They could be purchasing a different product line from the same company. The second source [7], just states that Law Enforcement Targets, Inc makes "hesitate no more" targets. It doesn't mention DHS. In fact, a quote from the company says that the product was designed based on requests from police forces.

One point that you didn't provide any sources for is the DHS practising "live-fire drills in and over major cities." Does "over" major cities imply they have military aircraft? I'm not sure what you meant by that.

I'm not saying that you're wrong, but the particular sources that you've chosen don't support your conclusions. DHS isn't my favorite government agency either, but I see no conspiracy here.

[*] http://en.wikipedia.org/wiki/Betteridge%27s_law_of_headlines