The steel used in steel cased ammo is much softer than the steel parts that in your Colt that will come into contact with it, so extra wear is not an issue. Look at some of your spent cases, see where the contact points are, and you will notice that there is little "wear marks" on the case, so there is equally, little wear marks on your rifle.
The quality of the Wolf 223 has been pretty good, for what it is. As good as most surplus that I have shot. It might smell different and be a little more dirty, but should function fine. The lacquer coated stuff had a problem with cases sticking in hot chambers, but the polymer coating seems to fix most of that. My Colts eat up the lacquer, while the J&T kit I build doesn't like it so much. Not really an issue, as it is rare to see it anymore.
Colts are "tough" they can take it. Some folks prefer to not use it, but reality is that it is fine if you choose to.
There have been some issues with the Wolf steel 308, being over/under charged and some issues in that caliber, but the 223 has been out for a long time with many users, so any REAL problem with it would be very well known by now.
Buy it, shoot it and enjoy