Actually stainless steel is generally much harder than mild steel. Chromium itself adds hardness to the metal. This is why stainless steel tends to make better pocket knives (of the same level of production) than mild steel. Also mild steel doesn't have enough carbon to be useful in applications calling for a harder metal. This is the same reason why 410 and 420 stainless steels tend to make poor sharp objects. Stainless steel parts also have to be painted since parkerizing is a no-no with high chrome steels. In addition, high end knives, drill bits, and saw blades, made from high carbon steel go through a more rigorous heat treatment process than stainless steels (differentially tempered, case hardened, etc) do. Most stainless steel tools/cutting tools go through a simple heating, annealing, and tempering process. Tool steels (alloy steels) tend to get their hardness (and in the case of cutting tools, carbides) from the same elements as more "exotic" stainless steels, just in smaller amounts so that their toughness isn't hindered.
But I digress to my point, any damage done to your rifle will be due to design and not material choice. Mild steel is easy to work with, cheap, and well suited for general purpose parts that won't experience a ton of stress. They anneal easily and are extremely rugged (when's the last time you heard of an I Beam just failing for the heck of it?). Hardening the pieces is really only so that the part is properly annealed and won't bend/deform/crack over time/with use. So long as proper design considerations are in place for a stainless steel part (modified cotter pin or original part) there's no real reason why it should fail either in a non-load experiencing area of the gun. The real problem is probably that there is a clearance issue or there is simply increased wear due to vibrations because the stainless steel cotter pin is 5-10 points harder (rockwell C scale). A hard steel knife will shave pieces off of a piece of aluminum very easily, just like a hard cotter pin. A soft, crappy, cotter pin will simply deform with use. A cotter pin that is far too hard (Stainless steel or carbon steel) will snap off with use.
I don't own an AR so I can't really muse beyond that, but I felt I should throw in a bit of my metallurgical knowledge into this thread.