The upper on the FAL is legally the firearm (it is the part that is registered), and that is technically the only prohibited part. The lower, trigger group, barrel assy and gas system are just regular gun parts.
It would be interesting to use the FAL lower (but have it the registered part), and manufacture an upper based on the SVT 40, or something like that, maybe a newer design, even base the upper on an AR15 upper (well, the bolt/barrel assembly).
this is an interesting idea, take an ar-10 upper, an fal lower and add a mag well/mating assembly, maybe to use m-14 mags