MGL 140-123 says NOTHING about magazines. nothing! not a single sentence regarding magazine capacity.
MGL 140-128 says NOTHING about magazines. All it says is that there will be penalties for selling firearms(not magazines) by an unlicensed dealer/person.
MGL 140-131M talks about large capacity magazines but it says nothing about magazines reworked/modified by a dealer to become a non-large capacity mag. In other words, if a dealer sells you a Magpul AR mag that has been reworked/modified to accept no more than 10 bullets, it is a regular magazine.
The modification question of magazines is no different from the modification of an AR to become Mass-compliant. As long as the dealer can modify the part to be compliant, it is compliant. The most important aspect here is WHO can work on a magazine to make it Mass compliant. The individual must be able to legally possess large-capacity magazines in MA AND manufacturing license. As a non-manufacturer, an individual cannot go to NH, buy a large capacity mag and modify it themselves prior to bringing it back to MA. It must come from a dealer. To protect yourself, keep the purchase receipt to prove that the magazine was indeed sold by a MA FFL.
So yes, you FFL's can turn a large capacity mag into a 10 rounder and re-sell it. They won't get in trouble legally if they do. Not even a little. On the other hand, you as a buyer must be able to prove that the magazine was a 10 rounder since the day you bought it(ie: KEEP THE RECEIPT!)