The "mini Garand" is the idea that springs into my head. Imagine a Mini-14 sized rifle but with top-fed Garand style clips. Since .223 is small, the clips could hold more than 8 rounds. A 10-round clip would circumvent BS capacity laws, but there's no reason an extended magazine couldn't be attached if the rifle was designed for it, so long as bigger clips were available.
One design issue for a high-capacity internal magazine would be that a curved internal magazine and hence curved clip doesn't seem feasible, although perhaps it would work.
I'm actually fine with smaller clips. Anyone who thinks higher capacity alone is their big strategic advantage is likely to get themselves killed pretty quickly. An M1 is still superior to an M16 in an open area such as the desert or open planes, and no amount of magazine capacity can change that.
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