I fully agree that it may not have been the wisest choice of roles, or that just because teens in real life do this kind of thing, that means Miley should choose to portray them as a career choice. While it may not be the wisest move, it is also not the worst choice she could make, in my opinion. on the other hand, it sure has gotten a LOT of people talking about her, so maybe it is a wise career mve on some level - I truly have no idea.
The clothing in Walmart is likely due to a contract signed a couple of years ago, if not even before then. She may have thought that the clothing line would have lost some of it's appeal when she chose to do the move and the video. Or she may just be trying to develop a new market and fully saturate the old children's market. The use of her image as Hannah Montana may not even be something that she has any control over. Disney may control that name and image, it all depends on how the contracts are signed. Disney is pretty ruthless about securing rights to various characters and the actors who play the roles. (I would hope Miley's father was savvy enough to keep from signing over all rights, but who knows?)
Kids are not going to be able to separate Hannah and Miley, or they might understand it very well. Isn't the entire Hannah Montana character designed to show the difference between a character and the real person who acts it out? I haven't seen much of the show, but that seems to be the basis of the show, esp in the beginning.
For a very long time Disney had a set in stone policy that none of their original series would last more than 2 years. No new episodes were made after the 2 year mark was reached for many shows - I can remember two that could easily have lasted far longer and were cut off anyway. It is possible that when Miley and her parents/manager/whomevers committed to the movie, the music, etc... that they figured that Miley's Disney career, at least as Hannah Montana, would be over and much of the success of the various product lines would also have peaked in profitability and in the public's memory.
I don't personally think this is a wise movie choice, but I can see how a teen could make some mistakes while transitioning from a child actor to an adult actor.