Two thoughts.
1. I wonder if that new Heizer defense .223 hand cannon has anything to do with this.
No, this started a long time ago, shortly after the first AR pistol was produced.
Sometimes they are VERY quick on this and don't bother taking public comment - such as when someone started turning out AK74 pistols. VERY quickly after that, 7n6 was banned from import. Same with 6.5 brass bullets, as soon as one prototype 6.5 SPC handgun was produced Barnes got notice to stop producing 6.5 brass projectiles (despite people trying to stop that particular manufacturer from making the pistol, knowing what would happen).
2. Is .223 M855 out of a handgun barrel even capable of penetrating armor? Would that matter as an argument?
It's irrelevant as the law isn't based on any sort of scientific evaluation of armor piercing. It doesn't even define what "Armor" is, let alone how much "piercing" is required.
SS109/M855 penetrates soft body armor the same as FMJ.
The design specifications of SS109 called for 3mm penetration of steel at 600 meters - or, put another way, "Capable of penetrating a helmet." This assumes it is fired out of a 20" barrel and at a certain muzzle velocity.
55gr FMJ can't do that - it loses too much velocity on the way to 600 meters, and doesn't have enough structural integrity to defeat the steel. SS109 can because it has slightly more mass, loses slightly less velocity, and has that steel tip in the front 1/3 of the projectile.
(Even with that working towards it, SS109 won't reliably pass that 3mm of steel out of a 16" or shorter carbine barrel; it was designed for the M249 SAW basically to support better plunging fire at a standoff distance.)
Anyway, the bottom line is science has nothing at all to do with this particular law. It's a poor law, all feel good bullhockey that had no public safety basis or basis in fact to begin with.