There is some truth here in many of the responses above. However, a couple of years after the barrel diameter decision was made, we found out that the "bent barrel problem with the M16A1" did not realy exist in the first place. What was happening is that armorers were using a close fitting "drop gauge" through the bore to see if it was bent during annual inspections. If the gauge did not pass throuh freely, then the barrel was assumed "bent" and replaced. For example, when I ran an armory at Quantico between 1976 through 1980 with over 2,600 M16A1's, we probably replaced about 70-80 bent barrels per year. And this experience was one of the reasons "fixing the bending barrel problem" became an M16A2 program issue.
However, what was really wrong with about 99% of those "bent barrels" was that there was a burr at the edge of the drilled gas port, that over time, shaved off enough bullet jacket material to form a little mound. And it was this mound of gliding metal that was causing the gauge to hang-up.
We proved this by taking several "bent barrels" and aggressively brushing that area of the bore with a bore brush mounted in an electric drill. In all cases, the "bent barrel gauge" then dropped freely through the bore.
So in retrospect, we fixed a problem that did not exist.
The reason later that carbine barrels came out with this same diameter front end is that the logisticians wanted Colt to use the same sight tower assembly for both rifle & carbine, but this didn't quite work out that way as the carbine sight tower was found to need to position the front sight post a little higher than that of the rifle. But at least the .750" diameter tooling & gauging remains the same.