Does it have a FA sear installed? Some guns can simply have a the hole drilled for the sear, while other lowers have a sear block that has to be machined out before a sear will work. Assuming this is the case, it is not illegal. In fact, there are transferable copies of converted AR's available to those in Class 3 friendly locations. Of course, you are going to spend around $10-12k for it, unless you are referring to a post dealer sample. These guns generally run around the same price as a regular AR, but you have to be a Class III dealer or exempt (Govt, LEO, etc). Now, that doesn't mean any LEO or Govt type can go out and buy one.
To answer your question, there is very little difference in a standard AR lower and that of an M16. The main difference is the M16 will have a hole drilled through the lower for the sear pin, while an AR will not. Plus, as I mentioned, some AR lowers have a shelf inside which prevent even adding a sear even if there is a hole drilled. This shelf also prevents the use of a drop in auto sear, which are also legal to buy (if you can find a transferable/registered model).
It is completely safe to do, assuming the job was done correctly.