The problem is that the weapon and ammo has to hit at reasonable ranges, similar to where a real weapon would be able to hit. To get a projectile to travel that far it has to travel fast, and a fast moving projectile capable of traveling that distance is gonna hit HARD. Someone is going to have his protective gear off at the wrong time and now you have a dead, or seriously injured, soldier.
I have seen ramped up paint ball markers that throw paint at 800 FPS. Considering that's just a hair slower than a .45acp round and you'll understand the danger. Sure it breaks on impact, but so will your eye or temple. A point blank groin hit with an 800 fps paintball makes me hurt just thinking about it. You can fire them slower but then it doesn't act like a real weapon; its inaccurate and its simply lobbing shots out beyond 40 yards.
Simunition can be fired from regular weapons, with slight modification to prevent use of real ammo by accident. These rounds are currently used by the military for training but still require safety gear for the rounds travel about 600 fps. You have the same problem as paint balls when using this in large unit training scenarios. Someone is going to do something stupid and then someone is going to die. Small unit tactics can be practiced this way with force on force scenarios where it is possible to monitor the participants at all times.
I understand what you mean though about the MILES gear. Hiding behind a piece of paper is not exactly the kind of training one wants a soldier to learn to depend on. However, for long range, large unit training, its still pretty good, and everyone gets to go home at the end of the day.
