After reading all of the above, it is not clear that the OP is trying to sort out the apparent excessive sizing of the brass, resulting in the excessive headspace.
Also, he keeps mentioning over annealing. I don't believe annealing has anything to do with the problem, as annealed brass will size the same; the only thing different would be the amount of spring back in the brass if it is dead soft.
If you anneal, only the neck should be annealed. (Unless you are doing some wildcat case forming, not the case here) If the shoulder is annealed, and softened more than it should, the firing pin will drive the case forward. IOW the case will move forward, the shoulder will be driven back because this will take less force to move the shoulder than dent the primer.
Personally, at the price of 223 brass, I wouldn't anneal. Also because of the short neck, too easy to soften the shoulder. may be wise to pitch that brass.
Just a comment on your powder choice, H335 and BLC-2. I've used both, but I always start with a CCI 450 or a Rem 7 1/2 primer, especially with a starting load. I seem to use more CFE 223 now, or I did, my Mossberg Modern Rifle is in lockdown and will be for at least 2 years thanks to the May 1st OIC.
The Hornady L-N-L comparator is a tool I would not be without. It has solved more reloading mysteries than any other tool on the bench. A GO gauge is a handy way to calibrate the L-N-L tool.
Now if you were having issue with a 35 Remington, I would have felt compelled to give the long version explanation. Lucky you, LOL.
Nitro