As you were: conceited or just easier to correct?

I thought it was to be taken literally. In other words, go back to my last correct command (as you were, before I screwed everyone up).

FM 22-5: The commander gives the command AS YOU WERE to revoke a preparatory command that he has given. The command AS YOU WERE must be given prior to the command of execution. The commander cannot cancel the command of execution with AS YOU WERE. If an improper command is not revoked, the personnel execute the movement in the best manner possible

During DnC, when I'd hear the command "as you were", I always took it to mean, "Continue what you were doing because I screwed up." 

The reason you as YOU were is because the group you gave the command to is moving. The person giving the command is stationary so saying as you were is just letting them know to return to the position they were previously at. This is usually only done as long as the command of execution was not given. If the command was executed you have to just do another facing movement. Hope this helps.

In the Navy, I would use "Belay that" for a screwed up order. That translates as "Cancel that action order entirely." If you wanted just to stop the action at whatever stage it had currently reached the correct order was "Avast ..." but usually only Boatswains Mates or others used to working in the Deck Division would understand that word. I would usually attempt to immediately follow the "belay" order with the correct order. That procedure was also appropriate in overriding a junior's orders.
Example: JOOD: "Right full rudder!" OOD: "Belay that! I have the Conn. Left full rudder!" Followed soon thereafter by a period of instruction (a$$ chewing) for the JOOD by the OOD or the Senior Watch Officer out of ear shot from the rest of the bridge watch once the situation had fully stabilized.