When I was in the service, 20% of our qual score with the M-16A1 was at 500 meters with iron sights. I routinely got 8 out of 10 shots in the scoring rings at that distance. I can tell you from being in the target pits that I wouldn't want to get hit with a 55gr 5.56 at that distance.
I've heard other people say this, but I've also heard many others say that this is not true. What branch were you in that this was required? I thought the requirement for M16/500 meter was just a large silhouette and no rings.
I'm not saying you're lying, I've just heard several different folks argue this point - there's a pretty famous story about it on the Hide (son-in-law was a Marine, talking trash, etc...).
And as to 55gr NATO at 500yds - I didn't say you couldn't do it, I would just think that the tiniest bit of wind would play havoc with your shots. To each his own I guess - just doesn't sound like something I'd have any fun with at all. It requires more skill/patience than I've got I guess.