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Yes, it would be very easy to make a barrel capable of firing a bullet to fit on the end of the pencil. That would be illegal without proper registration
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But - if you stuck a rifled barrel on it, and it was for your own personal use, wouldn't that be ok?
I believe I read here someplace that you could build a gun - provided it didn't cross the lines of AOW or full auto, without any problems from the BATF.