RE: How does this happen? (pic)
 

It's a federal case, while I wouldn't expect federal cases to have crimped primer pocket, inspection of the 200 rd bulk pack I have sitting on the shelf sure enough crimped primers.

RE: How does this happen? (pic)
 

Was thinking about the pics while going over some .223 cases I picked up at the local gun range. A lot of the cases looked just like your's and there were even some with the stamp of PROG that looked the same way after decapping. Didn't take much effort to prime them except for the occasional one that I had to use the deburring tool on. It sure does look like they cut all the way down the side of the primer pocket to make the crimp.

RE: How does this happen? (pic)
 

I found This on line, notice the components you can get with it (90381 Military Crimp Remover, small).
That should make it pretty easy to do 500 rounds

http://www.rcbs.com/default.asp?menu=1&s1=4&s2=4&s3=39