I have a CMMG dedicated .22LR upper with a 16" barrel. In my experience, it is VERY accurate - I would say equal or better than a stock Model 60. You mention "half-dollar sized groups at 50 yards." That is pretty easy to accomplish with the CMMG upper.
Personally, I would recommend the 16" carbine upper over the 20" A2 configuration. The 20" barrel offers no benefit over 16" for the .22LR (since muzzle velocity on that round tops out in a 16"-18" barrel, and falls off after that). If anything, the 20" barrel may be less accurate due to the fact that it is less stiff, and there is a greater chance for movement to affect accuracy.
Also you mention a price of $500. That is considerably more than the CMMG 16" .22LR upper, which runs about $360-$370.
Here is a link to my experience with a CMMG dedicated .22LR upper:
http://www.thehighroad.org/showthrea...ight=cmmg+wasp