The upper has to be built from scratch. Original
Why's that?
The upper has to be built from scratch. Original

Why's that?

The upper on a SAW is the receiver, so you can't use it as a non-firearm upper. It's kinda like a FAL or HK, you can modify it to use an AR lower but that still doesn't make it any less of a receiver in itself. At that point it would be two guns in one....and even if you use a semi auto SAW the ATF would view it as making a semi auto receiver into a contraband full auto. That's one of the primary reasons we don't have SAW and RPD uppers, as the ATF had determined they were firearms instead of simply uppers. Also reference the XMG uppers for AR's, the ATF determined they were in fact receivers. They're still legal to use, but only on semi-auto receivers...M16 receivers constitute a full auto conversion. On a semi-auto lower, you're not making the upper (which is a firearm by itself) a full auto; it's legal to put two semi-auto firearms together. Put a semi-auto firearm on a full auto lower, and you've made a full auto firearm out of the XMG, thus constituting an illegal full auto conversion.
To make a long explanation brief, one would need to make a receiver from scratch that is not only incapable of being a firearm by itself, it also cannot be compatible with a SAW fire control group. It can't work in any configuration as a firearm, only as an upper for a registered MG.
One of the issues they ran into was that the SAW was so drastically different from the M10 that they called shenanigans on it being too far removed from the original MG, likely because they simply wanted to railroad the designer. The way I figure it could be done is to remove the belt feed mechanism (but leave the receiver intact so it can still have those parts installed) and run solely on the mags. In this configuration, it's no different than the Sabre which has already been approved. Give it the recoil rod that extends into the stock and makes it an integral part of the lower. Once it's sold, well, the owner can put in all the belt feed mechanisms he wants as an upgrade, but it can still feed out of mags in just the same way that the Sabre can.
The upper has to be built from scratch. Original
Why's that?
On a semi-auto lower, you're not making the upper (which is a firearm by itself) a full auto; it's legal to put two semi-auto firearms together. Put a semi-auto firearm on a full auto lower, and you've made a full auto firearm out of the XMG, thus constituting an illegal full auto conversion.
The way I figure it could be done is to remove the belt feed mechanism (but leave the receiver intact so it can still have those parts installed) and run solely on the mags.

You make some interesting points but as far as the XMG, I believe you are incorrect. The XMG "upper" was originally sold as a Title I firearm (and still is). There is a serial # manufacturer's name, city, state, and model. But most importantly a XMG "upper" must be transferred via 4473 like any other Title I firearm. For a XMG to function as a machinegun there would need to be an AR-15 type semi auto lower (also a title I firearm) and a AR-15 type of registered machinegun conversion device such as a Lightning Link or Drop In Auto Sear or a M16 registered receiver (a Title II firearm). A Machinegun may only be one firearm per registration. So a XMG "upper" (Title I firearm) + an AR-15 type lower receiver (Title I firearm) + an AR-15 machinegun conversion device or a XMG "upper" (Title I firearm) and a M16 RR (Title II firearm) = one too many firearms firing automatically per one registration.
It is my understanding that Freedom Ordinance has no intention to make a 9mm belt fed upper because they don't feel that there would be the return they would need on their investment. Certainly a rifle caliber beltfed upper based on the M249 SAW would bring other buyers from outside the "MAC" community. It would seem to me that "you need to walk before you can run" would apply here. A viable rifle caliber upper would need to be well established before a belt fed. Take a Slidefire BFR-556A http://www.slidefire.com/products/rifles/bfr-556a bring it to a smith with a M16 RR or conversion device and you could have a 5.56X45 belt fed machinegun. How many M16 RR or LL/DIAS owners are doing that right now? Not many.
If you feel that there is a huge demand for this product, make the product, fill that void, and make that big profit. It is my understanding that there is a HUGE difference between making a one off and actually producing any item even with limited production, let alone a complicated mechanical item like a belt feed unit. There are a number of talented individuals that might be able to make a prototype. But coming up with production tolerances, programing to make the pieces consistent, producing and packaging the finished product, marketing, customer services, websites, service after the sale, while actually making a profit to live on is not even the same galaxy, let alone ball park as making a one off that might or might not hold up to long term use, IMHO. If it was that easy, there would already be several on the market. At most of the full auto shoots I have been at, beltfed guns have been a very tiny percentage of the machineguns there. And I'm lucky enough to own a 5.56X45 beltfed with multiple configurations and I rarely shoot them. Mostly because of logistics and some from the expense.
Once a machinegun, always a machinegun. A machinegun must be destroyed as per NFA Branch guide lines https://www.atf.gov/firearms/machinegun-destruction to not be considered a firearm. I believe that is why you don't see full auto machinegun receivers modified and sold as Title I firearms. So it is my limited understanding, to use a destroyed machinegun receiver as an "upper" i.e. an unregulated part, the parts of that receiver must be modified so it would not be considered a firearm (let alone a machinegun) before welding it back together. If not, welding it back together would make a machinegun or possibly even a Title I firearm. It is my understanding that modifying the receiver after completion would still be a firearm even after being modified to an "upper" configuration. If the upper receiver was considered by the Tech Branch as a firearm, like the XMG that resulting firearm can't be used with a machinegun as an "upper".
So most seem to agree that using virgin materials to make the "upper" will be less likely to be considered a firearm than a modified rewelded firearm receiver. Ultimately, if someone is looking to have a design ruled by the Tech Branch as not being a firearm in and of itself, then using materials that had never been a firearm would seem a safer bet. How much of Len's design was "bad blood" and how much was you welded together a machinegun receiver then modified it, I don't know. My prototype will be made with materials that were never considered a firearm at any point.
Anyone heard anymore on the 5.56 AR upper? Heard a rumor of one being developed but nothing of late.
We have other projects that are getting the focus and machine time right now. It's not a rumor we will make one it's just not happening in the time frame I had hoped.

Why's that?