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I can rent one at a range near me so the "military LEO" thing may have a work around.
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It's not a "work around' because the law covers
ownership. You rent the gun, there is no change of ownership. The legal owner is just letting you shoot it (under their supervision, never leaves their property etc.) and charging you for it.
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It is a myth that Clinton eliminated a bunch of FFL's. In fact ATF gave those "dealers" every opportunity to get legal (obtain a business license, comply with local laws, sales tax permits, zoning, etc.) Most chose to relinquish their FFL rather than get legal.
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I don't think its a myth, more of a difference in point of view. If I remember right, the "hobby dealers" (aka kitchen table dealers) were ALREADY legal, complying with applicable local business and zoning laws as well as the FFL requirements.
What eliminated those guys who A)mostly did it for personal enjoyment, and B) operated on very small profit margins was the Clinton administration raising the price of the FFL license from $30 to $300 a year. They (mostly) didn't go out of the business rather than "get legal" they went out of business because the increase in the license fee cost them more than they were making. (added sufficient expense to negate their slim profits)