MAB, first a few questions.
1. Since it is a IAI (actually manufactured in Texas not Isreal), how did it perform before loaning it to your buddy?
2. If it performed fine before, how many rounds have you put through it?
3. Other than the plastic blank rounds, were the metal cased blank rounds lacquered in any way?
IAI are not to be confused with USGI carbines, most parts are cast not forged to include the receiver and the operating slide. IAI are notorious for having bad feed ramps, bent and binding slides and a number of other problems.
My USGI Saginaw had issues going into full battery with every other round; I replaced the operating slide spring and never had another issue.
Not to sound like a butt, BUT the ultimate fix would be to purcahse a reliable USGI thru the CMP. CMP has Rack grade USGI Inland ($419.00) and Underwoods ($479.00)for purchase, . One can never go wrong with USGI bought thru the CMP.
Finally, here is a board link with some true M1 carbine gurus.
http://www.ambackforum.com/viewforum.php?f=110
http://www.jouster.com/cgi-bin/carbine/carbine.pl?