Sticking an explosive warhead in a bullet is very non-Geneva Convention. As in massively so. Still no reason you couldn't do it. Hell you could probably fudge around the convention with some legal kung-fu if you really wanted to. Or just issue it to cops and spies not the millitary.
NATO, and the M-16, are 5.56mm. The M-16 has always been that caliber, since the first prototype actually.
