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Went out to the range today to sight in my TA31 shooting American Eagle 62g XM855 (Green-Tip) out a 16" SR-15. First sight in without the can, groups were what I would expect out of green tips. Then I screwed on the can and the groups opened up and dropped a bit. Adjusted and after that went through a mag and a half. Noticed the groups opening up wide and got to the point where only 1 out of 3 shots were on paper. From there I shot a few more to see what was going on and saw a flash through the ACOG, checked the target through the spotting scope and saw a key hole. At this point I had went through about 100 rounds prior. Packed it up and left from there. Investigated at home and the pics below is what I found. The cap was hit as you can see and taking a look at the flash hider I am not completely sure but it looks like melted lead? Looking to get some insight on this situation as far as the ammo, the condition of the cap (toss or fo) and any other observation in general. The can itself fortunately had no baffle strikes. I had shoot this ammo out the same rifle and can the week prior with no issues be it only 50-60 rounds were fired that go round. The groups that time were large but thought I was having an off day. Seems like the combo does not like this ammo.
http://i744.photobucket.com/albums/xx83/enricotesla/IMG_2772_zps2f88c9bd.jpg
http://i744.photobucket.com/albums/xx83/enricotesla/IMG_2773_zps02fb7d02.jpg
http://i744.photobucket.com/albums/xx83/enricotesla/IMG_2787_zps7e8afbe7.jpg
http://i744.photobucket.com/albums/xx83/enricotesla/IMG_2777_zps8759315b.jpg

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See my edit (must have edited while you were typing).

I'm guessing something in the MAD mount loosened,  or the threads aren't concentric.

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I've started wondering lately if it's really safe to shoot 855 through 556 suppressors.  Googling doesn't turn up much when searching for terms like "is shooting M855 safe with suppressor", etc.

The concern comes from the steel core penetrator being off center a lot of the times (what percentage? I do not know) and thus causing a wobble in the spinning projectile.  I have tons of the stuff and 2 Specwar 556s that are dedicated cans on 2 separate rifles.  I have not yet shot any of the 855 through them yet, mainly because of this concern.

Anyone have any ideas?

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The GM556LE is a variant of the TREK-T that has a slightly smaller entrance chamber due to thicker internal walls and a slight difference in assembly methods. It was designed initially for export requirements to southeast Asia for use with ammo having slightly higher chamber pressures. While a little more rugged with the shorter barrels, it is also slightly over 1 to 1.5 dB louder than the TREK-T due to a change in the entrance chamber.

You asked about running hard full auto. Here are the issues (ammo related), and these apply to any 5.56mm suppressor:

1. After 150 to 200 rounds full auto, burst, or rapid semi-auto, the bore of the barrel heats up to over 800 deg F. The bullet consists of a relatively large surface of copper (great heat conductor) surrounding a relatively small mass of lead (which melts at 625F). What happens is that there is softening and or some melting/vaporizing of the lead core which destabilizes the bullet. This resulting yaw will cause baffle strikes -- even with perfect alignment. We have documented proof of this in the appearance on targets, high speed video of the projectile exiting, and photo-spectrometric analysis of the deposits on the flash hiders. (As soon as I get a chance, I will generate an article on this for SAR.)
The "fix" for this is to open the suppressor bore aperture to allow for the wobble. .30 caliber suppressors have adequate clearance. The problem is that when you pen the bore aperture, the sound reduction decreases. We recently completed a development contract for a foreign military where we did just that and compensated by making the suppressor longer. Suppressors with tight bore apertures will exhibit baffle/endcap strikes sooner.

2. The other issue is the one of basic bullet instability with barrels shorter than 10.5 inches, which is why most manufacturers will not warrant shorter barrels. We have high speed videos showing instability from an 8 inch 1:7 barrel with all 5.56mm ammo except 70 grain match.

If you want a 5.56mm suppressor that will take the 1,000 round belt full auto dump, they are available, but they are called .308 suppressors. They will be longer and heavier and a little louder than a dedicated 5.56 suppressor.

An analogy I like is with the automobile. Today's autos are designed to run on a specific grade of fuel and run for in excess of 1/4 million miles. You can get a serious performance boost adding nitromethane to the fuel (great for drag racing), but engine life may now be measured in minutes instead of years.