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Is there something else to this story that I'm missing? 'Cause why wouldn't S&W replace this gun for the customer? I read his posts and went to his site but it still seems really odd that Smith wouldn't take care of this.
I've seen that before. It's caused by firing a shot with the compensator loose or misaligned. The first shot through throws crap into the barrel, the next bullet sheds its jacket, the third blows out the barrel. My guess is the trigger was "hard to pull" because the frame got bent.
The compensator on X-frame Smiths sometimes loosen up after a few shots when they're new. They also feature reverse threads. It's not unusual for people to think they're tight when they're not.