, I fully agree with the premise: IF you have an M16 lower, you can put any kind of upper you want on it.
Can't recall the exact source of the following - - Whether I read it or was told it by a machine gun dealer - - but it surely seemed authorative to me at the time: There are hundreds, perhaps thousands of MP5s legally registered and transferable. HOWEVER, the vast majority of these were originally HK94 carbines, and they have been converted to MP5 configuration. They are still called MP5s. That source also stated that there are probably under one hundred transferable MP5s in the USA which were originally manufactured as such, and they bring a huge premium if one has documentation to that effect.
Similarly, a great many Colt AR15s were legally converted to selective fire, and these, too, are now registered as M16s. Likewise, an ORIGINAL Colt M16 brings a premium over the converted guns.
I have seen a couple of M16s, originally made up with the 20" bbl, with an interchangeable upper, made in the pattern of the M4 carbine. The owners call these M4s. Who am I to say different? I've never examined an XM177 to see how it is marked. I would certainly have to rely on someone else to tell me if the item was original. I guess an exception would be if I saw one in the US Army's Small Arms Museum, if that's the proper name for it.
I am satisfied that Colt's sold a number of different M16 vaiants to law enforcement agencies. I believe it logically follows that some of these were of the XM177 pattern, but I have not seen any proof of this deduction. I'd be glad to learn something definitive on this score. I'd say such law enforcement examples, sold through normal commercial channels, would be authentic examples. If registered prior to the '86 ban, these would be tran=sferable.
And there are any number of shooters who own (semi only) AR15s which they term "M-Forgeries." Many of these are not even built up on Colt receivers.
I guess the bottom line here is that I really have but limited knowledge of these two branches of the AR15/M16 family tree.