I don’t think the military cares what the BATF thinks.
If the military still made the weapons, they would not care what the BATF thinks. That situation in small arms ceased to be with the demise of the Armory system in 1968.
Now, private companies make weapons for the military, and private companies have to comply with BATF(E) rules and regulations. And when we talk of “what constitutes a gun?” the answer from the BATF is “the receiver - the part with the serial number.”
That’s it. Put in a new receiver, you’ve created a new gun, with a new serial #. The old receiver can be disposed of as being built into another gun, destroyed or re-numbered (if you have a type 07 FFL).