1) The battery is larger than the stock 8.4v because :
A) The increased voltage adds a "cell", or the thing that looks like a AA battery.
B) Four Cells = 8.4 | Five Cells = 9.6V
2) It should fit in the butt of the gun without modification, if not I am not very familiar with the M16 stock, I always used the M4's with Crane Stock