The 12 o'clock position is actually called the Grenade Launcher Position but it can also be used when you want to fire the YUGO in singles shot mode with regular ammo instead of using blanks for launching practice grenades.
When the Selector button is set at 2 o'clock the semi-auto position a small hole in the gas valve aligns with a hole inside the gas block that aligns with a hole in the top of the barrel allowing gas to pass through and force the piston in the gas tube back which in turn strikes the opps rod underneath the rear sight,which in turn strikes the top of the bolt carrier and pushes the bolt back ejecting the fired round.
If the selector button is set to the 12 o'clock position the hole in the valve rotates over past the hole in the gas block and all the pressure is vented out the barrel. As far as having the magazine loaded with real ammo instead of blanks,that would depend on the circumstances at hand. Take into consideration that if you magazine is loaded with live ammo when you pull the bolt back to insert the rifle grenade you have to deal with the round being stripped off as you release the bolt,or you have to insert x number of blanks into the magazine on top of the live ammo fire your grenades rack the bolt back by hand until you get to the live ammo again.
The blank ammo offered today is mostly parade blanks,a true rifle grenade blank kicks like a 50 Cal black powder rifle with a heavy load. it's very easy to break your shoulder (which is the incorrect position to fire them from) or hand if not done correctly.
