What you were reading was probably a rumor that went wild. The barrel threads do not interchange and a T-38 won't feed 7.7 ammo without opening up the magazine well area. I re-cut one(T-38) to 6.5x55 and had to open the well up. A 7.7 is 58 long.
P.O. Ackley wrote about re-cutting a chamber to a barrel under the new chamber size and if I remember correctly it involved an 8MM mauser round. That could be where that came from.
There is an interesting old story from the NRA magazine about a guy that recut a T-38 to 30.06 thinking it was a .311/.312 bore and firing it. Needless to say he had problems, wrote to the NRA magazine for help, and it was soon discovered what a mistake he had made.
I try to keep an open mind when I hear stories, it is unreal what people do sometimes.