We got into a long drawn out discussion on the email list (back when that was working) over if one part made it illegal or not.
As you said the law actually states [i]any part designed and intended solely and exclusively, or combination of parts designed and intended, for use in [b]converting[/b] a weapon into a machinegun[/i] (emphasis added on converted by me)
By going by that alone with no other influence, it would seem to be legal to have a 100% M16 just without an autosear. M16 hammer, trigger, dico, selector, and carrier. Without an autosear it still won't fire auto. It might be possible to make it double by selecting it to auto, thereby diengaging the dico, however I have had a disco fail to engage between 5 and 10 times before and it never once doubled. I was pretty surprised when the hammer was down on a live round. Simple fact is, at least with mine, that there just isn't enough energy left when the hammer rides the carrier.
Anyway, as Steve said it kind of becomes an iffy issue since the ATF can turn nothing into something. It's highly [u]not[/u] recommended though. Grinding 1/2 inch of carrier back and you will show your intent to not have a FA gun should the ATF ever end up knocking at your door. And for that matter a bunch of uninformed people or cops won't be screaming to high hell if you open it up at the range and they see an M16 carrier.