What causes that, and what does it mean for functionality?
It means I'm getting overpressure and the headspacing is a bit off. The geometry in the chamber and its relation the the receiver and bolt is off a bit, which is leading to the bulged primers.
I was using 7.62 NATO MEN 2016 German production 147 grain ammunition, which should be perfectly specced for this chamber.
Shooting a gun that is improperly headspaced could result in a blown case.