The guy probably took it from a dead Iraqi and kept it as a souvenir, They do that ALL the time. US Troops are also training with AKs more as to familiarize themselves to the weapon system of the enemy.
The US military isn't running out of M16s to give to troops. We got stockpiles of them here. the M16A4 has recently been issued to troops, replacing the A2, so if they ran out of A4s in armories, they'd go back to A2s.
A few months ago, I saw Iraqi military trading their AKs, some even look customized for M16A4s
http://www.youtube.com/watch?v=r_teTvdAMX4
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"There's a fine line between not listening and not caring...I like to think I walk that line everyday of my life."
Blessed be the LORD, my rock, Who trains my hands for war, And my fingers for battle
Psalm 144:1
“It is always wrong to use force, unless it is more wrong not to.”