First off, the CMP NEVER offered any M14's for sale. They loaned them out to STATE RIFLE TEAMS to be used in service rifle competitions. The team could loan the rifles to individual riflemen under fairly strict custody control rules, and when the team or the CMP called the rifles in they had to be immediately surrendered. Some rifles were illegally sold out of this program by unscrupulous individuals.
Second, MKS's receivers were NOT demilled by the US government. They were demilled under old demill regs by the Israeli government. The crux of MKS's case seems to be that the laws were current when the demill work was done. But then, everything about MKS is pretty muddy, legally speaking.
Third, Once a Machinegun, Always a Machinegun is NOT simple ATF policy. It is just verbal shorthand for FEDERAL LAW, drafted and voted upon by CONGRESS and signed into law by the president. I'll quote it here for you:
"Title 26, United States Code, Chapt. 53 (The National Firearms Act)
Sub-Chapter B-General Provisions and Exemptions
Part I-Subsection 5845-Definitions
(b). Machinegun: The term "machinegun" means any weapon which shoots, IS DESIGNED TO SHOOT, OR CAN BE RESTORED TO SHOOT (emphasis mine), automatically more than one shot, without manually reloading, by a single function of the trigger. The term shall also include the frame or receiver of any such weapon, any part designed and intended solely and exclusively, or combination of parts designed and intended, for use in converting a weapon into a machinegun, and any combination of parts from which a machinegun can be assembled if such parts are in the possession or under the control of a person."
What this basically means is that if the receiver parts used by MKS or anyone else could, by welding or any other technical wizardry be restored to function as a machinegun, then the thing is still a machinegun.
The demilling laws were not written to make it harder to restore a demilled receiver to functional status. They were written and enacted to provide a mechanism by which a military firearm could be DESTROYED. The intent is that the receiver NEVER be restored to it's prior use, except perhaps as scrap steel poured into the crucible for re-use as base metal.
Every time technical advancements have made restoring demilled guns feasible, those demill procedures have been tightened up to take away that feasability. That demonstrates the CLEAR intent of the law and regulations. Efforts to circumvent that intent then tend to stand out as violations of that intent and the law.
MKS may technically be O.K. if they can prove that their receiver halves were properly demilled under the laws of that time and thus had become, legally, scrap metal. Then, technically, they might just win the court case and the receivers be restored to legal status. But that hinges on the court findng that the legal status as "scrap metal" over-rides Federal Law's definition of a machinegun. That, is by no means certain.
For the record, I don't believe in the restrictions placed on civilian ownership of machineguns, nor do I think the laws preventing further manufacture of machineguns for civilian registration and sale are constitutionally lawful. I also believe that BATF searches for the most stringent and prohibitive interpretations of every law and regulation because institutionally, it is against civilian firearms ownership.
I also think that MKS was targeted for persecution by BATF, but I find that MKS made it easy for them by playing fast and loose with the rules. MKS has also made it a business practice to screw over their customers when the cost of doing the right thing by them was more than negligible. So MKS can go to hell, in my opinion, whether they are legally exhonerated or not.
As for the rifle in question, pop that baby out of the stock and look over that receiver carefully. Somewhere there has to be a marking for the re-manufacturing process (whoever welded it back together). If you can find the name, consider calling BATF to check if they did, indeed, approve the remanufacture.
Simply having paid the federal excise tax on the firearm and passed it through the FFL procedure does not guarantee legality. MKS made a few hundred rifles, sold them as an FFL to other FFL's, paid the excise tax on the rifles etc. and those rifles have still been declared illegal. Those are bureaucratic functions and none of them has any legal ramifications in terms of federal approval of the transfer. In light of MKS difficulties. What I would like to see is a BATF approval letter written to the original manufacturer of the rifle (whoever restored the receivers) telling him that his process was legal. Then of course, you would want to be able to demonstrate that the rifle in your possession was produced by that manufacturer, and thus, covered by the letter. Sound like a lot of hoops to jump through? It is, but if the BATF should decide your receiver is illegal, they WILL take it and you'll jump through a hell of a lot more hoops trying to get it back.