The age of the ammo is not a factor here. S&W saysthe gun was not defective, so that only leaves the ammo.
You didn't load the ammo, and you are certain that it was factory loaded, right? IF that is correct, then the ammo maker is at fault. Unless someone put reloaded rounds in the factory box, before you bought it (and that does happen sometimes), the factory needs to know what happened.
You may wind up with your best option being to buy a new gun at cost from S&W, I can't say. But at the least, you need to tell the ammo maker what happened, and provide the lot# of the ammo, if you have it.
There is a trust issue involved as well. IF the maker wants the ammo to examine, you have to trust that they will do a fair and unbiased job. Odds are they will, I think.
You may get replacement of your gun. You may not. That is one issue, and sorry, I can't help you there. But a second issue is always present in these situations, and that is could this ammo do that to someone else? The only thing one can do about that is inform the ammo maker, and let them decide if a recall is in order.
In your situation, with ammo 15 years old, probably not. S&W is under no obligation to contact Federal on your behalf, after all, all they have is your word, and the remainder of the case you sent them with the gun. S&W should have no issues providing their results to Federal, IF Federal asks, but they won't be asked if you don't tell them there is a problem.
My advice is contact Federal, provide all the information you can, including reference to S&W's letter, and ask how this can be made right(for you), and safe for the rest of the shooting public.
Good Luck, and please report back to us about how it works out.
As far as the ammo is concerned, I see only two likely possibilities. The round was loaded wrong (wrong powder/amount) creating excessive pressure. This would be a factory error.
Or, the bullet set back when chambered, creating the dangerous pressure overload. This is also a factory error (insufficient neck tension of the case) but it is a different kind of error, and would take a different kind of investigation to reveal. The remaining rounds in the lot are critical to determining which possibility is more likely, and if it was that single round, or something in the production run that was defective.
All else being equal (and it almost never is) bigger bullets tend to work better.