How can the Barrel be properly screwed into the steel receiver and still flex such that the deflection is noticeable to the naked eye? I am having trouble wrapping my head around that improbability, although I do not doubt CobraGT or Wolverine's findings. That is some crazy Barrel deflection caused by the Handguard Grub Screw or some other negative interaction of parts!
After pulling my upper apart, I'm pretty sure I know what the problem is. The barrel threads into the steel upper receiver. My barrel/upper receiver install appears to be fine, but when you lay the steel upper receiver on a flat surface, the barrel is canted to the right 1-2mm at the gas block. As everything APPEARS fine at the point where the barrel and upper receiver meet, I think the threads milled into the receiver for the barrel to screw into are canted slightly, resulting in the problem I see.
The one-piece aluminum 'shell' that includes the picatinny top rail and handguard slides onto rails on the outside of the steel receiver. The tolerances between this shell and the steel upper receiver are not particularly tight, which is is something I would NOT see as a positive, as it allows potential movement between the shell (where the frigging SIGHTS are mounted) and the receiver where the barrel is mounted.
As a result of these loose tolerances, by loosening the grub screw and pushing the barrel to the left, it is possible to adjust the position of the barrel within the handguard and re-tighten it, which I did. This doesn't FIX the problem of the barrel not being in line with the upper receiver, but does allow the barrel to more-or-less end up aligned with the optic rails. There will still be some left-to-right discrepancies between POI at various ranges, but this should help.
So, the loose tolerances between the upper steel receiver and aluminum 'shell' are sort of a feature, for rifles with ####ty quality control and off-line barrels, as it allows you to force the aluminum shell to closer match the crooked barrel.
What M+M SHOULD do as a design change,
if they can manage to get their barrels in straight, is tighten the tolerances between the steel receiver and aluminum upper, press-fit the two together, and permanently pin them together. This would result in more consistent accuracy.
...grub screw to adjust the whole rail in relation to the barrel... frigging ridiculous...