Of course, there is always the interpretation that Jormungandr IS the Ocean.
For it to make sense, you have to keep in mind how the Vikings thought the world was constructed. While they did think the world was flat and knew nothing of the universe (according to Norse myths, the sky is actually solid far, far above us), as seafearers they knew perfectly well that the sea was much bigger than the land — so to them, the landmasses where people lived were just "islands" located in the middle of the enormous World Sea, which stretches out in all directions beyond everything else. Looking at the world like this, it becomes obvious that since Jormungand is so big that he encircles the world, there is literally no place for him to be but the sea; it's the only place he'll fit.
Also, the universe of Norse Myth have nine worlds. Jormungand may be larger than Midgard, hence being able to circle it, but he's probably not as big as the Yggdrasil. The ocean, not being earth, is probably not counted as a part of the world.
Actually the Norse knew that the earth was round (or at least curved).
How about a quasi-scientific explanation? As animals get larger, they need less breaths per unit of time; to demonstrate this, simply compare yourself to a whale. Also, reptiles have an extremely slow metabolism, especially so for a reptile surrounded by the ice-cold waters of the deep ocean. It should be entirely possible to construct an animal's need for oxygen based on its size and metabolism, Jormungand's might be a breath every millennium or so.
Let's say that it's head is in the middle of the pacific ocean. From there on it's body goes east, under the Americas, over Europe and Asia or under Africa and between Asia and Oceania. From there it's body continues until it's tail meets it's head. Thus it encircles the world.
Ragnarok: Depending on which collection of myths you happen to be reading, they're written one of two ways: it's already happened, or it's going to happen.
Going to happen? Prophecy, and You Can't Fight Fate. Happened already? Well, a new world has replaced the old one, we're living in it.