But this is normal for a peacetime army; keep the officer cadre intact and recruit/conscript as need arises, rather than keep a whole army sitting around doing nothing. The Red Army certainly did this in the 80's at least, and the US is similarly top-heavy now, despite its degree of activity.
It doesn't have to be that way:
You could recruit only the officers and NCOs you need and hire the rank and file cheaply from people unable to find any other work - and in Germany in the 20s and 30s there are lots of those guys.
If you are really savvy you select your Officers on the basis of their loyalty to the Government rather than their competence, perhaps unfortunately that wasn't an option open to the Weimar Republic.