This is the kind of thing that sticks in my craw, so lets play devil's advocate. I don't interpret the condition of sale as being for scrap only.
The originally intended purpose of this ammunition was to:
A) fire a FMJ bullet from 5.56X45 FA weapon systems.
B) as a means to kill enemy combatants
C) to teach and train our soldiers how to kill enemy combatants and train them to do so.
Full auto weapons must have the primers crimped in place to allow reliable cycling. Once the primer crimp is "cut" away to allowing priming, the brass is no longer suitable for its original purpose and for all intents and purposes has been destroyed for that purpose. If the brass is resized to .223 Remington in dies marked .223 Remington and loaded with an expanding bullet or a match bullet that is to be used in a rifle marked .223 Remington, the condition of sale appears to have been satisfied. After all, the government has gone to great lengths to instruct us on the classification of weapons and their intended use. Therefore we know that a SAW and a Remington 700 Varmint serve completely different purposes. The handloaded .223 cartridge is not a reloaded 5.56X45 cartridge and neither the new specification nor the new intended purpose of these handloads is that of the original cartridge, whose originally intended purpose was provide a means to kill enemy combatants, or train towards that end where the new intended purpose is to humanely kill game animals or varmints and shoot targets in the context of sport.
Rant over.