I have seen the Ares unfinished AR-15 receivers. It is made of polymer with the void spaces for the trigger/safety filled with another color polymer. The customer simply drill out most of the filler plastic, and when sufficiently thinned out simply use a plyer to pull the filler plastic out yielding a reasonably machined void space. The filling that plugs the bottom trigger slot will pull out when the filler plastic rennants is pulled. The customer simply drill out the pin holes to complete the receiver. I think the ATF will contend that the receiver is more then 80 percent complete because the void space for the trigger/safety was already complete and filled with another polymer plastic. It is no different then someone completing most of an aluminum receiver and filling the void space with wax and claim the receiver is 80 percent complete. Problem for ATF is did they approve the polymer design for sale to public. Possible that they reviewed the approved product and changed their minds. That has happen before and the manufacturer does not get a refund for the products made and sold before the ATF changed their minds on their own approval.
The mag well and fc group void is molded of one color and then the receiver is molded around it. It was never a completed receiver to start.
1) I believe that is in fact what they're contending.
2) According to Ares, EP foresaw that ATF might say that, and molds the receiver AROUND the plug, so that there is never a moment that the receiver exists as a standalone entity. According to Ares, ATF was made aware of their misconception and forged ahead anyway, as if their idea were correct, as opposed to bullshit.
I think the ATF will contend that the receiver is more then 80 percent complete because the void space for the trigger/safety was already complete and filled with another polymer plastic.
Here is a blog that details an EP Armory build. It is not as you describe.
http://www.thebangswitch.com/building-an-ep-armory-80-ar-lower/
But EP Armory claims that they start with the plug, then mold the rest of the lower around the plug, so a lower with a cavity never existed. If you machined an aluminum lower then filled the void with wax, the lower with a void did exist at one time.
Semantics? Maybe. But the BAFTE did issue a letter confirming that the EP Armory lower was compliant with the 80% rule. Problem is that BAFTE changed their minds.