Rocketman,
I'll take a stab at answering this. This thread has been great. It got me thinking and researching. I got out my old college metallurgy book as well as did some research on the net to try and fully understand the phase transformation the steel is going through.
Here goes...anyone can chime in if I'm wrong.
Full annealing, which is what Mike is doing is accomplished by first raising the temp of the steel about 50 degrees above the A3 line (see carbon steel phase diagram). By doing this you are changing all the steel into austentite.
Once you get all the steel at the correct temp you slowly cool to get the steel to create very large grain pearlite. These terms are all engineering terms used to describe the types of phases of steel at different temperatures that can form based on its composition.
If you cool slow enough you get large grains of perlite. When you get this you get annealed steel, which is high ductile.
By just raising the temp and then quenching very quickly (as in case hardening) you never get to the pearlite phase of steel which requires very slowly cooling, so you never truly anneal the steel. Quenching create martensite.
The other key item to understanding why Mike needed to anneal the steel is related to carbon content in the surface of the steel. While researching I wanted to find information suggesting that during annealing the process allowed a majority of the excess carbon trapped in the case harden layer to diffuse out of the steel. I have not found the exact text that I want, but from what I have deduced annealing does allow diffusion of carbon so that you are reducing the % of carbon in the surface layer.
By re-case hardening without previously annealing you are trapping the original carbon from the first case hardening along with the additional carbon you are adding. This most likely pushes the carbon content in the surface too high and quenching quickly yields an overly brittle surface that is prone to cracking. My guess is that even some form of tempering will not help enough in eliminating the case hardened receiver from failing in the future.
In the end annealing basically sets the steel back to its baseline prior to doing any work in the form of hardening. By not putting the steel back to a baseline you are just adding to what someone has already done to it which pushes it past its yield point.
I'm not sure if that answers your question fully, but that is the best I can do with the research so far and my prior metallurgy knowledge which is 10 years old and limited.
If you spend a little time looking on Google for carbon steel, case hardeing, carburization, martensite, austentite and annealing, most of what I describe will be revealed by some website or another.
Hope this helps put theory to practical purpose.
Later,
Jason