Wow, someone was up late thinking about this!
Basically, the steel doesn't expand when the cartridge is fired, thereby sealing the chamber. The resultant gas blowby does 2 things: dirties the receiver and drops the pressure in the barrel. The AR was designed to use the gas pressure tapped from the barrel to cycle the bolt carrier assembly. When that pressure is reduced, some ARs won't cycle.
As a component, the steel is cheaper than brass, so there is a reduced cost in production. Certainly across the spectrum of ammo, some steel cased is just cheap across the board in terms of components, and the resultant accuracy bears that out. But Hornady, in an effort to reduce cost for high volume competition shooters, makes a steel cased match line in 5.56 and 7.62.
What I've wondered is if steel cased ammo is like blanks: if you were to run the action wetter than normal, would an AR that choked before cycle steel cased ammo?
RT, excellent find on that thread!