No mystery, the M16A2 was the rifle selected originally but Colt would not allow licensed production in Australia. The Aussie government negotiated with Colt, Colt refused so the government dropped Colt and went to Steyr.
As for the lower quality of the Aussie made version, yeah, it caused a small scandal here. The government tried to cut the cost of the AUG by using cheaper materials (specifically some of the plastics) and also, so we were told when we got them issued, by making the hammer out of plastic instead of metal.
Now as for the plastic hammer, whether that's true or not, there were reports of hammers cracking and even breaking under the stress of repeated firing. There was also a problem with the buttplate, being a certain type of soft rubber it had a tendency to get softer and very sticky if petrol, kerosene, insect repellent and so on got on it.
As far as I know, all these problems were fixed and the later production was of a much higher quality, certainly by the time we got ours delivered to the unit the only problem we encountered was with the buttplate and with the wear & tear on the aluminium receiver from constantly removing the barrel. Part of the drill to check if the weapon was clear was to remove the barrel and hold it up with the body for inspection, this was changed later on and the NCO inspecting would insert a finger into the chamber to check it was empty.
The drill may have changed since I was in - about 17 years ago now, scary how time flies - if they've made the receiver more robust.
Anyway, to wander back on topic... avantman42, your Falklands sourcebook is pretty damned good! And thanks to all for the updated info on the Falklands government, my google-fu was weak and all I could find was basic info without any solid dates. Something I did find though, was a picture thread on some forum showing the FIDF and also RMs training in the Falklands, part of the thread showed them deploying by helicopter but the helicopters were owned/operated by I think it was Bristow? But certainly a civilian operator and not military.
I should have bookmarked the thread
Edit: Found it! Although much of what is mentioned seems to be post-2000s
http://www.militaryphotos.net/forums...-the-Falklands
There's also this thread at ARRSE.com with some members of the FIDF chiming in, about the reasons for selecting the AUG over the L85.
http://www.arrse.co.uk/military-hist...nce-force.html