I have read that possessing both Australian and Polish passports has possible but doubtful military service implications and also taxation . . . What sort of taxation implications apply?
Well - you should consider that Poland could potentially call you up for military service at any time as a Polish citizen - although the chances are very, very remote as conscription was abolished.
Taxation can be a complex affair - but it's based upon residence. If you're living in Australia and only pay visits to Poland on holiday, then you won't have any obligations (assuming you don't own property/etc here) regarding tax. It's not like the American system which obliges you to report your worldwide income regardless if you live there or not.
The implication with dual citizenship is more that in Poland, the Australian embassy system won't be able to provide you with consular assistance should you need it.