The regulation doesn't say "if a lot of energy is imparted" or "if the projectile is expelled at least 10 feet"
It says "expel a projectile by the action of an explosive". The projectile is clearly expelled. Otherwise, what would be the point?
It clearly "expels the projectile".
SAAMI has a video for firefighters that shows what happens when a round ignites with nothing to contain the blast. Most rounds won't penetrate cardboard at a few inches distance but the bullet IS expelled and it is "by the action of an explosive".
There's also nothing in the Reg about the device being reusable. The ATF doesn't care what happens to the device when/after it goes BOOM!.
The term “firearm” means
(A) any weapon (including a starter gun) which will or is designed to or may readily be converted to expel a projectile by the action of an explosive;
Is it a weapon? Obviously, they're killing things with it.
Does it use the action of an explosive? Obviously, it does.
Does it "expels a projectile". If the bullet MOVES under the force of the explosion, it is "expelled". A primer ALONE will expel a bullet from a case. I can't see how anyone can argue that a fully loaded round doesn't "expel" the bullet.