what function is served in part 2 by putting the argument between noble and hawkins

The bitter argument between Noble and Hawkins is designed to show the clash of values involved in the struggle for Irish independence. The mutual animosity between Noble and Hawkins isn't just related to their being enemies; it's also based on their radically different world-views. If Noble and Hawkins weren't serving in their respective armies, it's highly unlikely that they'd ever meet (or would ever want to meet). As well as being a staunch Irish republican, Noble is a devout Catholic. As such, he believes that he has God on his side. For his part, Hawkins is an equally devout atheist, who gets into heated arguments with Noble over the existence of God.
What's really important here is that Noble's faith adds an extra dimension to his personality. He isn't simply a political fanatic; his values are informed by his belief system as much as by his deeply-held political convictions. We can see this, for example, when he refuses to lie to the prisoners in order to make it easier to lead them to their deaths. What O' Connor appears to be hinting at here is the overriding importance of transcendent moral values (especially) during war time.