I sure won't say anything about a range deciding on what ammo they want used- that is their business.
I will say I am a bit interested in the damage. I have seen hundreds of thousands of rounds hit AR500 plates. Most rifle shots were .223 FMJ and 7.62x39 steel core ammo. Most shocking was to see a 300 WM soft point put a hole right through a 3/8 AR 500 plate (stationary, not one that swings) I personally shot one of my 3/8 AR 500 plates that was leaning against a berm (so not swinging) with my 375 Ruger and it also went right through as well. I think the bullet was a 300 gr Hornady soft point but it could have been a 250 TTSX or 270 TSX, it was a long time ago.
I bought some 1/4" AR500 swingers from Fraser valley Targets that were for pistol only, but of course I needed to try rifles on them. At 50 yards the .223 FMJ made a clear dent. The 7.62 steel core did virtually nothing. Just a regular pockmark.
So I can understand that the range 1/4" ar500 is not a swinger and obviously a fixed target will soak up more energy, but that damage looks really harsh, and I wonder if something was wrong with the plate.
As an aside, 1/4" works great for pistols. I will no longer buy 3/8" for rifles, I only want 1/2". For personal use where you (a reasonably proficient shooter) will mostly hit the middle of the plate, 3/8" is fine. For a "range" target, where all sorts of people are going to be shooting at it with questionable accuracy, the 1/2" wins, even though it's more money. The reason is usually the holes to hang the targets or whatever mount is used. Those are weak spots and when they get hammered lots they get brittle and crack. The 1/2 lasts way longer.