The M16 has a max "effective range" of 550 meters. Maximum effective range is the maximum range within which a weapon is effective against its intended target. Meaning at that range a rifleman has a 90% change of a first round hit, (just a hit, NOT a head shot) and, BIG AND the bullet has enough energy remaining to incapacitate a man sized target. At 1000 meters the bullet would only have about 156 Ft-lbs of energy remaining, and it's remaining velocity would be about 1063 fps. That's slower than the speed of sound (1110 fps). The remaining speed and energy would barely kill a large rabbit. A 22 caliber pistol has more speed and energy than that at 30 ft.
People seem to get caught up on the max range numbers but forget that the other numbers involved as Rico pointed out matter just as much.
I think that the current assault rifle accuracey may not be the whole problem rather the fact that you can be that accurate instantly, after taking a round to the chest or running 100m.
Is deviation a cone eminating out from the barrel which increaes over distance or is it more of a tube. A tube which has a 6" spread no matter the range for example? I would hate to see accuracey deviation at all ranges increased just to compensate for long range deviation.