The regs are simple, straightfoward, and unambiguous as to the bullet material and construction. The M855 projectile meets none of those criteria. Not even a 'close maybe'. In any category. At all.
The BATFE pulled similar nonsense with the high power rocketry community not long after 9/11. Our rocket fuel of choice, ammonium perchlorate composite propellant, or APCP, was reclassified by the BATFE gang as a low explosive. APCP does not even come close to meeting the accepted scientific definition of a low explosive. It doesn't even meet the BATFE's definition of a low explosive.
BATFE did this because, in their feeble minds, every HP rocketeer is a budding terrorist and must be discouraged from participating in the hobby.
After it was reclassified as LE, we all had to get low explosive user permits from BATFE, buy BATFE-approved magazines to store our rocket motors, and submit to random BATFE inspections of our magazines and usage logs.
It took a lawsuit waged over an almost ten year period through various courts to force the BATFE to remove APCP from their LE list.
Judge Reggie Walton of the United States District Court for the District of Columbia heard the final suit and slapped the BATFE down hard. His written judgment was a thing of beauty.
No more LEUPs for the rocket community, but it took ten years and mucho lawyer fees to accomplish.
Bottom line, the BATFE has a history of doing things like this, where they violate their own regulations and existing law. It will likely take years to get this ammo reclassification overturned if has to make its way through the courts. Legislation would be much faster.