Badger, you bring up several very interesting points. And I want you to know that I agree with you more than I disagree.
Put me firmly in the replace the M16 camp. I think that we could do better if we really wanted to.
As for money, the government is going to spend tons of it either way.
My personal opinion though... If we are going to go through the trouble of adopting an new rifle. Lets switch from .223 to a new designed from the ground up intermediate cartridge. End the complaints about the .223 once and for all. It doesn't have to be as big as the .308. We have come a long way in the design of cartridges. We can get flat shooting, light recoil, but greater hitting power. No problem.
As for spring loaded vs. fixed ejector, I see what you are saying about the tolerences on a .223 sized case, but IIRC, the Aug, FNC, AR70-90, and G33/G41 all used fixed ejectors, as well as the AK 74 with its 5.45 cartridge. I think that it can be done. I have experience horrible malfunctions with an AR from getting tiny bits of brass shaving stuck under the roll pin. No way to fix it in the field either, and you have pretty much a single shot rifle.
I agree about direct gas impingement. I think it is kind of silly. I issued a challenge once on TFL for people to find me an infantry rifle designed after the AR that had direct gas impingement. Believe it or not there have been a couple, but no really successful ones. (including the G11, which surprised the heck out of me, I had to go look at the schematics when I heard that).
If we are going to switch guns, then I think we should ditch the Nato Stanag AR mag. What a flimsy piece of crap. Sure they are light, but they are weak and hard to strip. If you want to see a great light weight .223 mag, take a look at the East German Weiger mags. That is what the AR mag should have been.
I'm not adverse to switching to the G36. I just would like to see them get the heck tested out of them first. (by us, not the Germans or the Spainards. And there ain't no way I'm going to trust the British after thier last rifle)