The Major alluded to the small percentage of combat troops actually engaging in an actual fire fight, I wonder if that has changed at all. C-grunt, from your post, it appears not much has changed.
By the way, the flak jackets back in my day were useless against direct small weapon fire in general and the 7.62 X 54R especially, is the new body armor more effective?
After reading the entire "paper" by the Major, he does bring up good points:
1. It seems the enemy belligerents engage from high ground, predominately
2. They maintain a fluid engagement of movement.
3. The terrain they engage from does not allow support or indirect fire from us.
4. The general combat training of our troops does not include longer distance situational engagements.
5. In general the 5.56 is marginal at best at current engagement distances, but with training and modification it can be.
Some of this does make sense in that our primary strategy is to engage in 'closer' quarters, bringing the fight to 'our' sweet spot so to speak. Correct me if I am wrong.
OTH, i'll try to address a couple of your points.
What the Major alluded to, and C-Grunt's post as well, are both correct. Even though we operate on a non-linear battlefield which now sees all MOS' (not just combat arms) in the fight, very few soldiers actually fire thier weapons. From my experience, i've watched video and heard feedback from LOGPAC units who's main tactic was to just break contact. Even though they are "trained" for the fight they choose not to fight. Your average loggy typically isn't going to bring the fight to the enemy. Nothing against these MOS'. My Infantrymen depend on them for everything. Class 1, 2, 3, 4, 5, etc. They are vital.
Flak jackets of the day, correct me if i'm wrong, were just soft armor, right? Today's IBA's, IOTV's, and geeze - even the high speed stuff i've never seen, is some good stuff in terms of the ability to stop. The SAPI and ESAPI plates are rated to stop 7.62 ball and 7.62 AP respectively. This info is easily found about the net. The big thing is the soft armor the plates lay over is no better than it was 40 years ago. Soft armor is just that, soft armor. No matter how you cut it, it's only going to be able to withstand (at best) high powered pistol rounds.
Going back to the Major's paper. The Infantry half-click is a lot more than just being able to hit your target at 500 meters. There are a lot of factors working against each other out there today. The basic premise of the Infantry is to close with and kill the enemy. No one is going to argue that. But the way we do it isn't rocket science. As was nicely alluded to earlier, the favored means of killing the enemy is through indirect fires. When that isn't available fires enable maneuver. That is to say, "SSG Smith, your squad, suppress. SSG Jones, your guys, follow me." Even if the engagements is 1000 meters away initially, while one squad suppresses the second will utilize favorable terrain to maneuver on the enemy. And it sucks, but you will spend a lot of time running with your 100+ pounds of gear from cover to cover until you're in position to assault the enemy.
My point with the last paragraph is that there is a lot more to effectively engaging the enemy than being a good shot. Every internet commando's dream is to sit on some rock overlooking a valley and picking off hordes of (insert your favorite enemy here) with thier scoped weatheremchesterbergy at 1000 yards with no support or supply.
The military may operate in a counter-insurgency enviorment now and we may play crime scene investigator in the house we just raided at o'dark thirty. But when it comes right down to it, it won't matter what bullets you're using. 5.56, 6.5, 7.62, 50 bmg, 9mm. It may sound antiquated, but it is what is being taught to our young combat arms leaders everyday. The sexy stuff that happens inside houses has been the same for a long time as well. The military has been teaching how to clear a room for a long time. It's no different with a 20" M16 than it is with a 14.5" M4. Hell, I did it in the school house with an M240B. Let me tell it, it sucks, but you can do it with whatever weapons are at your disposal.
In the end, the way you approach the problem is much more important over what you're approaching it with. Software over hardware as they say.