¿Cómo convertir una hora DATEPART que es hora militar para la medianoche (00) en un valor que pueda usar cuando lo necesite para un cálculo?

Si no me falta nada, esto es lo que podría intentar en lugar de su bucle:

DECLARE
  @StartTime time,
  @EndTime   time;

SET @StartTime = '22:30:00';
SET @EndTime   = '00:52:00';

WITH timerange AS (
  SELECT
    StartTime = CAST(@StartTime AS datetime),
    EndTime   = DATEADD(
      DAY,
      CASE WHEN @StartTime > @EndTime THEN 1 ELSE 0 END,
      CAST(@EndTime AS datetime)
    )
),
hourly AS (
  SELECT
    n.number,
    t.StartTime,
    t.EndTime,
    HStart = DATEADD(HOUR, DATEDIFF(HOUR, 0, t.StartTime) + n.number    , 0),
    HEnd   = DATEADD(HOUR, DATEDIFF(HOUR, 0, t.StartTime) + n.number + 1, 0)
  FROM timerange t
    INNER JOIN master..spt_values n
      ON n.number BETWEEN 0 AND DATEDIFF(HOUR, t.StartTime, t.EndTime)
  WHERE n.type = 'P'
),
hourly2 AS (
  SELECT
    number,
    HStart = CASE WHEN StartTime > HStart THEN StartTime ELSE HStart END,
    HEnd   = CASE WHEN EndTime   < HEnd   THEN EndTime   ELSE HEnd   END
  FROM hourly
)
SELECT
  StartHour   = DATEPART(HOUR  , HStart),
  StartMinute = DATEPART(MINUTE, HStart),
  EndHour     = DATEPART(HOUR  , HEnd  ),
  EndMinute   = DATEPART(MINUTE, HEnd  ),
  StartTime   = CAST(HStart AS time),
  EndTime     = CAST(HEnd   AS time)
FROM hourly2
ORDER BY number
;

La salida producida es esta:

StartHour   StartMinute EndHour     EndMinute   StartTime        EndTime
----------- ----------- ----------- ----------- ---------------- ----------------
22          30          23          0           22:30:00.0000000 23:00:00.0000000
23          0           0           0           23:00:00.0000000 00:00:00.0000000
0           0           0           52          00:00:00.0000000 00:52:00.0000000