Wow, a discussion about twist rates for the .223 Remington/5.56x45mm and I didn't join until the 4th page!
1) The 1-7" twist is more versatile than a 1-9", especially with the short 16" carbines having the majority of the AR-15 market these days. There's definitely a lot of "mil-spec" influence there, but I for one don't mind having the faster twist barrel. My Colt 6920 will shoot as well as reasonably expected with everything from good 55gr FMJ ammo up to the 77gr Sierra or Nosler match bullets I used to use in Highpower matches.
2) As already mentioned, the quality of various 55gr FMJ bullets is incredibly variable. When I first acquired my Colt, 5.56/.223 ammo was very hard to come by, being sometime during one of the Obanic-buying sprees. I distinctly remember getting my hands on some American Eagle ammo that was all over the target at 100 yards. It was really frustrating until I started using different ammo. My best guess is that the bases of the bullets looked a lot like the samples posted earlier in this thread, or the bullets were marginally undersized in diameter. At the same time, I have a small stash of Indepence 55gr FMJ that the Colt will shoot into perfectly acceptable 1.5-MOA groups at 100 yards.
3) Fast-twist barrels can still shoot lighter bullets accurately. When I used to shoot Highpower, I would load 52gr Nosler HPBTs over W748 for 100 yard winter practice. Even with a 20", 1-7" barrel, that ammo would easily shoot sub-MOA groups, which again was perfectly acceptable when shooting from position. The same barrel would also (probably) shoot sub-MOA at 600-yards with the long 80gr Nosler HPBT bullets. (I say probably because I never bench rested that combination at 600 yards, it was always fired from sling-supported prone.)
4) The 1-9" twist barrel is a bit of a compromise. It may shoot marginally better with marginal 55gr FMJ bullets. It may shoot marginally better with marginal 62gr steel tip bullets. At shorter lengths it can't be counted on to reliably stabilize long 75gr and heavier match bullets. For my money, I'd rather have the confidence of knowing my rifle will stabilize the longer bullets, and then see what it will do with shorter bullets. My CZ527FS shoots great with 65gr Sierra Gamekings, 69gr Nosler HPBTs, 75gr Hornady HPBTs and 55gr Nosler Varmeggedon flat-based HPs. It even gets OK accuracy with good 55gr FMJ ammo. But in the back of my head I know it may or may not stabilize any of the 77gr match bullets available.
5) After all of that, you never know what will shoot well in your rifle until you actually try it. I know of one shooter who had an expensive fast-twist match barrel installed on a bolt-action, chambered in .223 Remington, and for some reason it wouldn't group acceptably with anything other than 53gr Sierras.
And I always thought a 1-8" twist barrel was the sweet spot for a .223 Remington barrel. I had one on my Service Rifle for a while that I really liked, until it started throwing random 8s at 600 yards at the end of its life.