A .223 is not the same as a NATO 5.56. 5.56 weapons can safely fire .223 rounds; but, a weapon manufactured specifically for .223 cannot necessarily safely fire 5.56 rounds. Trying that can result in an unpleasant surprise for the shooter.
Why would someone with a .223 use the more expensive 5.56 ammo? It’ll quickly wear out their barrel or jam as you allude to. Typically a 5.56 shoots .223 ammo due to the cheaper price of rounds. The only issue is poor accuracy but moly powder can help that.