I have an upper from one of the Tapco kits. It is a Colt 20" 1/7 preban. I don't really need another 20" upper nor do I necessarily need another preban upper. Was thinking of cutting the barrel down to 16" and making it a kind of Dissapator type carbine. Anyone see any flaws in this plan?

I did exactly what your talking about and it works fine.  I put the upper together with a new bolt/bolt carrier on a new lower I put together with the collapsible stock and the rifle didn't function well at first.  I ended up cutting a coil or two off the buffer spring to get it to function right.  It's flawless now with a myriad of different ammo types.  I think the original problem may have associated with new bolt gas rings in a new bolt carrier.

When cutting that barrel, be careful if it's a chrome lined one.  The chrome lining is platted on and because the chrome is really hard it may flake at the cut or muzzle end.  I cut mine to 16.25" and stoned off the last 1/8 inch or so (using a lathe of course).