When they designed it, there wasn't any ban on mags, so a simple mod to an existing mag was better than building a whole new mag. Since there was no such thing as a post/pre-ban mag, logically there would have been no shortage of mags to modify. When the ban hit, it was too late to do much about redesigning it to take a different mag.
The technical problems with using the un-modded USGI mag were simply taken care of by the mod, and no mag ban was on anyone's thoughts because at design time, it didn't exist.
M-14 mags were actually cheap until the AR-10 came out, then the price sky rocketed after people realized what was going to happen to the number of M-14 mags. I paid as low as $5 for USGI mags right before the ban, before the AR-10 came out. The M-14 mag itself is also one of the best mags ever built in terms of strength and durability.
I had an original Sudanese AR-10, and the waffle mags for that were only $5 each too. When the SR-25 came out, and then the ban, they jumped to $80+ each.
It's just a matter of supply and demand. If the ban goes away, and someone builds a good USGI-equivelent mag, then the price will drop like a rock and there would be no thought as to why Armalite used the modded M14 mag.
Before the ban, many rifles used their own mag. Things like the AR-180 used an almost exact version of the M16 mag, but had the catch hole on the opposite side and a slightly different follower. FALs, HKs, etc all used different mags and had no problems getting contracts. The only reason for the prevelence of the M16 mag is it's NATO standard now. Before that, many 5.56mm used different mags.
A governemnt doesn't worry about if the mag is different, only that it works, because the contract itself will include enough mags. We have to think of such things because of the laws and such saddled on us, but governments don't. Because of this, the mag issue isn't an issue at all for contracts.
Ross