Yes, the majority of complaints come from the longer ranges of the 5.56, which does not alter the fact that, as a small bullet moving very quickly, FMJ rounds in that cartridge tend to lack stopping power. It has everything to do with the round; a bullet that does not deform bleeds energy vastly more slowly than one which does, and a small, fast round that does not yaw or deform will tend to cause minimal damage.
There are a surprising number of places on the body where you can poke a quarter-inch hole clean through and not cause lethal or even incapacitating damage. Mostly around the limbs, of course, but even through the torso in some cases. Hence the complaints.
The ideal, frankly, would be something along the lines of one of the new blended metal rounds, which functionally disintegrate inside a soft target. The test footage is... disturbing. Which is why frangible rounds in general are banned from military use.
The fact remains, however, that a FMJ round, particularly if it's been given time to slow down somewhat (which is a significant problem with the shorter-barreled M4, speaking of 5.56x45), runs a much higher chance of passing through the target with minimal damage compared to a hollow point or other frangible round which will dump its energy into the target rapidly and probably catastrophically.
No offense to your friend, but if the round spun him twice and knocked him down, that was less a matter of the power of the bullet and more a matter of him being unprepared for the hit. By the physical laws of the universe, the hit he took contained less energy than the one sustained by the man firing the weapon. Depending on the range, quite possibly considerably less. It is, however, theoretically compressed in time; rather than building over the length of the barrel, it is delivered over the depth of the wound.
And, as you mentioned, getting hit in the elbow doesn't leave a lot of room for expansion; one assumes he must have been struck in the bone in order to get that kind of energy transfer. Couple that with the fact that the arm itself serves as an energy absorption mechanism in this instance, and I seriously doubt that the impact threw him around like a ragdoll, even if the .223 round in question was using a hunting load that would break up on impact.
I also don't dispute that rifles, in general, are more lethal than handguns, in general, particularly when range is taken into account, as most handguns, due to a combination of factors, are not especially dangerous at ranges over a couple hundred feet at best.
It's important to note, however, that not all rounds are created equal, and that a heavier round, moving more slowly, can have more energy than a smaller round, moving faster. A 300 grain or so .44 Magnum round will actually hit harder than the 70 or so grain bullet from a .223 Remington cartridge, even though the .223 has a muzzle velocity around twice that of the .44.
