It sounds like you have your answer from S&W; outside of lawyering up and/or paying a private lab to do an analysis I don't think it will change.
I feel I've been treated fairly by S&W in the past, and I believe Federal is part of ATK who I also think will do right by you on this.
Take lots more pictures, and maybe have a good local smith take a look at it and offer an opinion in writing (you will have to pay for his time).
Contact Federal to see how they want to handle it; include Smith's letter with your correspondence. Start (or keep at) the paper/email trail and if you send it somewhere make sure you can track it.
All this is assuming this is factory loaded ammo; it reads like it is at least.
Good luck on this; I agree, guns shouldn't blow up w/ factory ammo.