Ok, so this is a pretty good question, but we need to straighten a few things out before I tackle this one. Some of your information is in error, and the way you've framed the question indicates to me that you're thinking about this in a distinctly modern way, which never would've occurred to a Roman. In the ancient world there's no real concept of mandatory military service in the way we think of. In the modern world mandatory military service means that you're conscripted for a series of years, usually only a couple, at a young age and then allowed to return to society after your service is over. This is not the way it worked in antiquity, and it would've been completely unthinkable. True, in many states such as Athens young men would be taken in for training around 18 or so, for the next two years or thereabouts, but even then it's not like you were confined to some sort of military service, disconnected from the rest of society. No, instead the young men reported in for their training when they were supposed to and went home when it was over. The end. In the ancient world there really aren't any standing armies before about 30, B.C. when Octavian took power. Armies were raised and disbanded as was necessary and when it was necessary, and they were funded, raised, and led by private citizens who may or may not have been ordered to by some higher government power. Any able-bodied man could be conscripted at any time, and it was considered part of your civic duty to remain ready for war throughout your life. This is the important part of the way "mandatory military service" in antiquity worked. It wasn't just young men being told they had to join the army for a set period of time. It was anyone (of course the young men were conscripted first, but often everyone else was too) and you didn't serve a set period of time and then go home, but instead you served for as long as the campaign took. So it's really very different from conscription as we see it now, it's much more like militia duty, but even that's not an accurate analogy since modern militias tend to still be officially part of a military force even when they aren't on-duty.

Now, at least in theory conscription ended with Marius, who recruited his legions completely from volunteers, which was rapidly copied by other generals. It's to Marius that we must give the credit for introducing the idea of the professional soldier to the world, since Marius recruited his men with the promise of land grants after what was essentially life-long service. Of course, although generals often said that the troops had to serve under them for extremely long periods of time, usually in the 1st Century, B.C. the legions of a general would be disbanded once he got what he wanted. So, after Sulla was made dictator, most of his troops got massive land grants in Italy (which caused an awful lot of fuss, as Marius' Italian land grants had before), and after Pompey returned from Asia Minor most of his legions were disbanded. Of course, the men of the legions could always be called back up again, since they were clients of their general, but this was somewhat rare except when the shit really hit the fan.

But you're right in saying that Augustus was responsible for the standardization of the number of legions. Why on earth would he do this, when at least in theory a larger number of troops meant more ability to expand and more tribute? That's precisely why Augustus limited the roll of legions. Previously legions had always been raised by whatever general needed them, which meant that private citizens were amassing enormous armies--just look at Caesar and Pompey, or the absurdly large armies under Octavian and Antony! This very fact is what allowed men like Marius, Sulla, Crassus, Pompey, Caesar, Antony, Sextus Pompey, and Octavian himself to become powerful, since commanding a large army brought with it a huge amount of private power. Not just private military power, but having a large army gave a general the ability to conquer territory to secure tribute and clients (this was the purpose of Caesar's campaigns in Gaul) for the general personally, as well as giving him a huge number of clients that he could use to his advantage and a very strong base of political support (it's thought that while Caesar was in Gaul he sent man of his legionaries on leave as well as the retired troops into the city to pack several key votes). The complete chaos of the civil wars was caused precisely by this, and Augustus knew full well that unless he personally controlled the recruitment he'd have to face someone else just like himself later, although Augustus used the excuse that it could threaten the peace of the state. This was something that later emperors were all too aware of, particularly since as the Principate matured the opportunities for private citizens to win fame and glory for themselves (and thus the political recognition that went along with it) decreased as emperors tried to plug all the various loopholes that people were trying to exploit. In fact, what Augustus feared if a single man wasn't in charge of recruitment is exactly what happened later on during several periods in which the emperor lost control of the armies, first during the turmoil of 69, A.D. but most notably during the 3rd Century, when everyone and his grandmother were gobbling up armies and territory.

Another thing is that the roll of legions really was perfectly adequate for the defense of the empire, as well as actual offensive actions. The defeat at Teutoburg was not the fault of an inadequate number of forces (after all, there were three freaking legions there, with their auxiliaries!) but instead was due to the complete incompetence of Varus, which can be attributed to various causes that I won't get into here. After all, Germanicus led a similar force in an offensive action some years later that was completely successful and put the Rhine tribes to flight for an awfully long time. And only four legions were necessary to take the entire island of Britain under Claudius. The panic that followed from the defeat at the Teutoburg is very similar to the panic that ensued after the Teutones defeated the Roman armies, right before Marius took over. Since Varus had stupidly lost his entire force, consisting of all the Rhine legions, there was nothing on the Rhine frontier to stop Arminius if he had chosen to march across in force--as luck would have it he didn't. Similar incidents often occurred when border forces were wiped out, but while these incidents of panic are often harped on by people who really don't know what they're talking about, they were very rare--far rarer, in fact, than the successful offensive operations conducted by the border legions. In Germania, Britain, Mauretania, Parthia, both Lesser and Greater Armenia, Dacia--the list goes on and on--Roman troops successfully mounted offensive operations into enemy territory. They rarely actually captured territory, however, mostly because emperors were more interested in grabbing loot and tribute (as was everyone until very recently) than having to govern far-away territories that would take a lot more effort than it was worth (this is what both Augustus and Varus found when they occupied Germania east of the Rhine, which was held for several years and later retaken under Germanicus. There just wasn't enough of worth to justify putting in the effort to build roads, station troops, and pour boatloads of money into the province).