Shotgun ammo don't disappear into thin air. The KSG's range is about 150m when the slug slows down. It's about 10% that in the game.
The reason is pretty simple. The guns have artificial damage, ranges, etc to keep one gun or class of guns from becoming too favored. With the maps being the size that they are, if SMGs performed like they do in the real world they would easily dominate over the rest of the classes outside of maybe the shotguns which have a much further range in real life as well. As to your particular situation it could have been several things that would cause an AR to get outgunned by an SMG. Really too many variables to even speculate properly.
The Guns aren't realistic!
We're playing CoD not much is realistic....
Their Aim > Your Aim
Concussion grenades would be way to much fun to be real. Intelligent equipment that knows who your enemy would cost to much. Targeting using magic that can see through walls doesn't exist. You want realism don't play a game made for people that suck at FPS.
Also for people who say you want realism join the military. If you ever join a military force that sets strict limits on where you can fight an enemy then when you spot the enemy tells you to get more kills before they are willing to unleash the pack of deadly dogs, artillery, air assets and other nasty stuff they have one standby you are in the worst military in the history of mankind. At least in the first call of duty when you were given just ammo and the other guy got a gun you know they didn't tell you they had a ton of crazy weapons they could unleash if you got some kills.
Also everything in this game is made out of indestructible materials. A real bombing run would kill everyone on the map.