the problem with building the pistol is that you need to remove the stock/pistol grip to take it apart, which would allow you to stick a stock on(which means NFA SBR violation). as for 16" barrels, you could always take some steel tubing, and make a permanent flash hider out of it. another concern is building the receiver in such a way as to prevent the use of full auto parts, such as putting a rail in the receiver(like the semi uzi) or using a undersized tube and turning your bolt down on a lathe. then there's the fire control problem.
I've got a mk3 kit that I've been trying to figure out how to build into a semi. havent really gotten to it yet. I'm kinda kicking around the idea of using an AR firing pin and some sort of bastardized AK or AR trigger group in a custom bottom end.