If there are no Maven artifacts in the internal repositories then the IntelliJ IDEA project will correctly reference the Maven sub-modules as "Module Dependency", as expected (and you have noted). As soon as our TeamCity build for the Maven project deploys the snapshot artifacts into our internal repository (which end up being downloaded into the local repository for the user), the IntelliJ IDEA project will switch over to using "Module Library" instead of the "Module Dependency" for the sub-modules in the maven project.

Issue was resolved