Occupation

What are the advantages?

As far as I know, the only advantage of occupation is for the occupied because they get 10% of any resources that are pillaged by the army from their town.

But the person taking over gets no benefits...

I'm sure you've already read this page but if not, it may shed some light:
http://s16.en.ikariam.com/index.php?view=informations&articleId=10043&mainId=10036

As a return member and rusty at the small things, I remember that if you can occupy someone off your island and perform an attack on the player you wish, You dont have to go thru the naval battle as well. Am I right ?

That's right. If you occupy a town a on a separate island, your army can use that town to get around naval battles.