the M855/SS-109 is supposed to be armor piercing, but really isn't. M855 is listed as "Ball ammo" under military covention, a number of people say that it's armor piercing on account of the steel plug it has. The reason for this was to make the bullet longer, and lower the BC. This was done originally by FN for the M249/MINIMI machinegun to make it effective out to 1000 yards.
I shoot a lot of these, and when they were first available, I did shoot quite a few of them at steel and noticed slightly better penetration, but nowhere near enough to call it actual AP. I've shot 5.56 AP ammo, and it makes short work of half inch mild steel even at long range.
As far as your accuracy performance, I'm not surprised, the military specification is 2 MOA for most ammo. Sometimes it shoots better, sometimes worse. The other thing to take into account is that all military ammo must be demilled before it can be sold on the civilian market. So it's possible that the bullets still have some pull marks where they are seated. Reducing the accuracy of these.
As far as bullets and so forth for reloading, the LC (or any mil) brass usually has a much thicker web, reducing the case capacity. Sometimes they even look like it's enough to cause an over-charge but I have never seen the signs of high pressure looking at reloads I've made. I usually load with 25gr of varget behind either 62gr FMJ (SS-109) bullets I buy surplus, or 55gr FMJ's I buy commercially. I am in the process of working up mil spec loads in this powder but havn't had the time.
I have loaded the 75gr AMAX bullets, and they just come out goofy, they really can't be seated deep enough to fit in an AR-15 magazine. They must be seated so deep the ogive is in the neck of the case.
I've loaded quite a few of the sierra 69gr HP-BT match bullets and I've had good experience with them. For shooting at paper, I would just go for a mid-weight bullet (about 60 grs) either the SS109 bullet, or a 55gr FMJ for paper punching. If I wanted to get serious about my accuracy, I would just buy big lots and QC my components (weigh cases, primers, powder, and bullets) to get a desireable result.
As for trim length, I usually trim to 1.750" and load a cartridge OAL of 2.250" no matter what bullets I'm using (I can't remember what I load my 55gr OAL to, but I load so the bullet cannelure is right at the case mouth so i can crimp it in place.)