My opinion (currently at least) is that the rapier was by no means a civilian weapon, but rather simply a weapon, used by military and civilians alike.
While by no means a proper study, some things I've noticed which seem to point in this direction would include, as mentioned, the name of the Pappenheimer hilt. While I'm not sure how that name and that hilt type got mated to each other, it would seem somewhat logical for such a name to be used for a weapon used in war.
Staying with the Pappenheimer hilt, the Royal Armoury in Stockholm has two Pappenheimer-hilted blades on display which were used by Gustav II Adolf in times of war.
One with the
hilt damaged as the king ended up fighting a Polish cavalryman during a recon trip outside of Dirschau in 1627. Next to it there's a
saber displayed which according to tradition is to have been taken in battle by the king from a Polish cavalryman "before the battle of Dirschau", its unclear if that would be the same man who chopped up the king's hilt.
There's also the blade he carried at
Lützen.
A third blade with a Pappenheimer hilt on display is also attributed the Gustav II, but with no mention of it being used in battle, instead it is to have been his favourite for everyday carry.
Now, Gustav II Adolf doesn't seem to have been leading from the front unless he absolutely had to, but he does seem to have ended up in combat personally at least two times, and he was wounded multiple times before Lützen. Thus I would guess that he would indeed have gone to battle knowing that he might have to fight for his own life. Still, he brought along something which, in my eyes, is clearly rapiers, which would be rather odd of these were somehow civilian weapons, unfit for the battlefield.
Then there's all those portraits we see of noblemen carrying some rather rapier-like swords. From what I've understood, these noblemen often saw themselves as warriors, or at the very least wished to be seen as such. Thus we generally see them painted in quite a lot of armour, helmet close at hand, etc. Adding a civilian sword to that would appear to be somewhat odd.
Including rapiers in paintings doesn't seem to end entirely with portraits of nobility either. Some examples of rapiers (or at least very rapier-like swords) in a more "general" setting can be seen here:
http://www.flickr.com/photos/roelipi...7603325963415/
As a personal observation (with all the possible errors that carries with it), I've had the chance to handle a pair of early 17th century swept hilt rapiers in person at auction viewings, and one thing I noticed was that they were by no means at all small and light weapons. Instead they were sturdy pieces of considerable mass, making it easy to imagine that these were made to be driven forward through quite a lot of obstacles, and far from the smallswords and modern fencing foils (and the Hollywood fencing that's based upon them) which I suspect colour quite a bit of popular opinion about rapiers. They didn't strike me as something made specifically to carry around all day as decoration and "just in case" weapon.
All in all, it seems to me that there were certainly at least "rapier-like" swords being used by people in a military position, without any second thoughts about it. In order to make the rapier a civilian weapon then, we must somehow find a way to differentiate the civilian ones form those which were used in battle. I'm not aware of any good way of drawing up the boundary between them.
As for the decline in armour, I have heard it stated elsewhere that it seems to have helped the usefulness of swords in general quite a bit, resulting in the sword becoming the prime cavalry weapon overall in the 18th century. I'm not sure how correct that is, but looking at Swedish cavalry tactics, they shifted more and more in favour of sword over pistol as we get closer to the year 1700, and somewhere around that turn of the century the sword eventually replaced the pistol as the primary weapon for cavalry.