The article is a lot more accurate than I would have expected from a mainstream publication like Atlantic. Unfortunately, while they got the most important things correct, like the powder issue, there are some myths in there as well. I'll try to correct them to the best of my knowledge.

First of all, credit where credit is due: Eugene Stoner did not design M16. He designed Armalite AR-10, which was chambered in 7.62x51mm, same as M14, and competed directly against it. It didn't do well in trials against M14 mostly because of Armalite's president Jim Sullivan submitted experimental prototypes for army testing over Stoner's objections; when their composite steel-aluminum barrel blew up in an extended fire test, that was that. But some of the brass were impressed by other advantages of the design even so, and when the army decided to investigate a .22 caliber rifle, they went back to Armalite and asked for a derivative design. Stoner didn't like the idea of a small cartridge, so the new design was done by his chief assistant Robert Fremont, assisted by Sullivan. So Stoner gets credit for developing the distinctive AR action, but not all the fine-tuning that article describes as "several different cycles must all work in harmony" that produced M16 itself.

On the effect of faster and lighter bullets: all bullets destabilize when they hit flesh. No amount of twist that can be imparted by rifling can compensate for that - bodies are just too dense, you'd have to spin the bullets so fast they would come apart at the muzzle. So going down from 1:14 barrel rifling twist to 1:12 does not affect that, and neither does velocity. Yes, I know that it quotes Stoner on this; he was wrong, simply because they didn't have enough terminal ballistics research back then to know better. In modern military rifles chambered in 5.56mm, the twist rate is usually 1:7, sometimes 1:9 - and the same ammo still produces the same terminal effect in them.

What matters, rather, is how the bullet destabilizes when it hits. A heavy bullet will usually just flip over so that it's going base first, but won't deviate much if at all from its trajectory. A lighter bullet will deviate more and earlier, causing curved wound channels. But if a bullet goes fast enough, it fragments, and then each fragment goes on its own separate curved wound channel, causing those devastating internal wounds. And that's exactly what the military 5.56 ammo does:

https://www.youtube.com/watch?v=6hJZdtPcVdE

(This shows the effect in ballistic gelatin, so there's no blood or gore. But it doesn't take much imagination to paint that picture for you once you have seen the sanitized effect, so it can still be very disturbing. Proceed with caution.)

This, by the way, is also partly why the original velocity spec for ammo was so high. The article implies that 3250 ft/s velocity requirement for M16 was a part of "marksman’s outlook" carried over from M14, but that's not the case, which is obvious if you look at the latter's specs - its muzzle velocity is 2800 ft/s. If you rely on fragmentation as the primary wounding mechanism, you have to drive bullets so fast that they're still fast enough to reliably fragment at the range where they hit - the lower initial velocity is, the closer your effective range. And reliable fragmentation velocity for M193 5.56mm ammo - the kind originally developed for the rifle - is around 2600 ft/s. If it starts at 3250 ft/s, that translates to about 200 yards out of a 20" barrel - a number that corresponds nicely with the engagement distances typical of modern infantry tactics.

The other reason for increased velocity is because it extends the "battlesight zero" range, which is the range of distances at which you can aim at the target without accounting for bullet rise/drop, and still hit close enough that it doesn't matter. Lighter and faster bullets have flatter trajectory early on, extending that range. But at longer ranges air resistance and wind drift become a greater factor, and higher sectional density to overcome them becomes more important than raw velocity. Thus it is generally the case that marksman and sniper rifles fire slower bullets than modern assault rifles, even if they share the caliber.

On manufacturing process, they say that the parts were "stamped out". That's not quite correct, except maybe when describing the process very informally. AKM receiver is stamped out of a thick metal sheet, but M16 receiver is forged out of a solid block of aluminum, and then machined to completion. Forging is more expensive than stamping, and machining afterwards makes it slower, too. But you can't make stamped guns out of aluminum - it's too weak. And aluminum means less weight for the same strength.

On the subject of reliability, it should be noted that in those first glowing reviews, it was compared to M14, which was not exactly a shining example of reliability, either. Nothing to do with the caliber - design and production quality issues. More details: http://looserounds.com/2015/01/30/the-m14-not-much-for-fight....

With respect to the powder problems, it's broadly correct, but the technical details aren't quite right. The real problem wasn't so much fouling as corrosion - the replacement Army gunpowder left residue that was far more corrosive, especially in a highly humid environment like the jungle. Even that might have not been a problem, if Sullivan didn't decide to drop chrome plating for the chamber to further decrease costs - it was the rust in the chamber that eventually caused the gun to jam in the field. Once they started chrome-plating the chambers, reliability problems mostly went away, although rust could still cause accuracy problems without frequent cleaning, because the bore was still not chromed. Modern military AR derivatives usually have the entire bore chromed, and it was already common back then - the original AK design already had it, as did M14, and Stoner's AR-10 even had a chrome-plated bolt - so this was pure penny pinching. The article kinda implies that chrome is unnecessary with clean-burning powder, but there are other good reasons to have it (or something comparable, like nitrocarburizing), which is why it's so pervasive even in cheap military guns today.

It's also interesting that they talk about how "marksman’s outlook" negatively affected the original M16 design, but missed the opportunity to mention how it re-surfaced later with M16A2. Short story is that USMC took a by-then decent M16A1 that had those initial issues debugged, and went on a quest to turn it into a competition rifle they have always wanted. So they e.g. made the stock longer - which is great for that perfect bladed posture on the range, but sucks in tight spaces like vehicle compartments, or when wearing body armor, or if you're shorter than average. The best part, though, was removal of fully automatic fire in favor of a 3-round burst, on the basis that full auto is mostly a waste of ammo anyway and single aimed shots are where it's at - ironic, for a gun that was originally designed around controllable full auto fire.

When Army saw the first results of that redesign, they were horrified, and wrote a scathing report on it. It's not that they didn't want a redesign in principle - there were plenty of legitimate improvements that could be made - but they didn't like the trade-offs in that particular redesign. However, USMC stood by it, A2 was already there, a hypothetical better Army redesign was not, and Congress back then would not approve a separate variant just for the Army. Most of the problems they brought up were eventually rectified later in M4 or M4A1. Makes for an interesting reading in retrospect, though.

https://apps.dtic.mil/dtic/tr/fulltext/u2/a168577.pdf

One of the people involved in that redesign shared some other bureaucratic horror stories online (as personal anecdotes, so take it with a grain of salt). For example, M16A2 added selector markings (safe/semi/burst) on the right side of the gun, which was weird because it didn't add the actual selector there - it remained on the left side only, as originally designed for right-handed shooters to use with their right thumb. According to the guy, it's an artifact of the managerial process that they had. At the very beginning, the officer in charge of the project asked the team to compile the list of desired improvements, sorted in descending order of importance. When they brought him a list spanning several pages, he threw out all but the first page, and said that everything that didn't fit couldn't have been important enough to bother with. The last item on that first page was ambidextrous selector markings; the first item on the following page was the ambidextrous selector itself. And so it went for 30 years, until they eventually added the missing bits in an M4A1 upgrade 5 years ago.