Re: Interesting video of a cute little Shotgun.
The upper is not the regulated part...per BATFE if it is attached to a registered machinegun (M16 lower in this case).
This is an unregulated part unless you have an AR lower lying around, at that point it is considered constructive possession of an unregistered Short Barreled Rifle/Shotgun in this case, as the caliber distinction is not the primary concern.
My guess would be that anyone with enough understanding of belt fed weapons and the capability to machine and construct the upper is well aware of the consequences and is using a registered MG lower. I personally would use a post sample M16 lower in case of some failure which may damage the lower.