There is no way to properly rechamber a Handi to .223 AI. This comes from conversations with Ackley's shop in the mid 80s; because of the change in shoulder angle, the only way for factory ammo to headspace is at the neck/shoulder junction rather than on the datum line on the shoulder. To properly clean up the original chamber, the neck/shoulder juncture must be moved forward slightly; this will obviously result in excess headspace with factory ammo. The only way that Ackley's shop would rechamber a barrrel to an AI cartriidge was to set the barrel back one thread and then cut a correct chamber.
Of course if one sizes the cases for the longer AI chamber then it is like any other wildcat. But Ackley touted his Improved chambers as being able to safely fire factory ammo, and they will - if the barrel had been set back first.
L'S'
I spoke to a 'smith here west of Cleveland who had reservations about doing a Handi' for me, because of the same thing you said. that's why quick'd's explanation of using rimmed cartridges is easier to achieve in a Handi'. it headspaces on the rim, of course.
The way I see it, in a Handi an 'improved' reamer could be custom cut by either SSK or Clymer to work with a Handi in its present chambering. It just wouldn't totally clean up the shoulder juncture with the neck and would probably work best with that juncture very gently 'radiused' like they do with the Weatherby's. that way there is a little 'crush' when an 'improved' cartridge is chambered in the rifle, and a factory regular cartridge would headspace at the juncture. SSK (and Clymer?) would also cut a sizing die for you, too.
the whole point of the excercise is ease of extraction (for those who know), less stretching of brass in a chamber, and increased velocity. to really 'improve' a .223, therefore, i still suggest going to a .222 Remington Magnum Improved......even if .222 Rem' Mag' ammo is hard to find!
take care,
SS'