Why does O'Brien insist that war stories are not moral, and why does he try to reconsrtuct what Lemon must have experienced the moment of his...

In The Things They Carried, O'Brien gives the recipe for "How to Tell a True War Story" by saying the stomach should believe it.  It must pack an emotional wallup.  If it doesn't, it comes across as manufactured, invented, moralistic, political.  It becomes a lie by becoming something else--an abstraction, a polemic, a sermon--not a story.  A war story is a love story.  It brings back loving memories.  It resurrects friendly ghosts.

O'Brien's thesis for the book is:

I want you to feel what I felt. I want you to know why story-truth is truer sometimes than happening-truth (O'Brien 179).

So, O'Brien says that true war stories need to be light on  facts (logos) and morality (ethos).  Instead, they must be visceral and brutal and gory and full of cussing (pathos).  That's the way soldiers talk.  That's their style.  And it's been this way since Trojan war mythology.

First of all, war is absurd.  It does not operate according to ethical, moral, or religious rules.  Bullets are indiscriminate.  During war, a soldier or storyteller does not have time to moralize.  Morality and war don't mix.

Remember woman at the reading?  She wanted a moral or a lesson or some kind of redeeming meaning by the end of the story he read.  She didn't understand that the story itself is the lesson.  She didn't understand that it was a love story.

A good story doesn't preach: it's morals are implicit, if there are any at all.  To the “dumb cooze” audience reading O'Brien's novel for realistic depictions of war and conventional storytelling his thesis is a betrayal, not a paradox; O'Brien, to these readers, comes across as weak, dishonest, one so full of regret that he rejects the traditionally masculine-defined rules of engagement in both war (“kill or be killed”) and storytelling (unreliable narrator).

Lemon's death becomes a funny and beautiful thing.  He reconstructs the memory by draining the focus on death from it.  He drains the horror from it.  If a soldier and storyteller can do that, then he can open up new perspectives that are, ironically, both beautiful and funny.