"Actually I've encountered several sources suggesting that the K98 has the capability to take off a limb."
As someone who's living is firearms, and greatest love in life is firearms, let me say "HAW HAW NO". Ask any real firearms expert if the little 7.92x57mm round can remove a limb. That is NOT how bullet wounds work, at all, and I am offended that someone who would call himself a respectable source for firearms information would say such a ludicrous thing.
"Also in a game where you can release mutant fireball breathing bunny-rabbits I'm hearing a lot of bitching about accuracy... :|"
I would like to note, I don't give two shits about how realistic your mod is, I'm just telling you how it is so you can better your mod and minimal knowledge of firearms.
"In a way, the M4 should be more accurate than the M16 not due to accuracy on the firing range but rather due to the M4 weighing less and being smaller, and thus the M4 is slightly easier to move around in close-quarters."
This is a good idea, it's the only good way to represent the carbines advantages over the rifle.
"Your next goal should be to make the 9mm and the .45 distinct weapons. I have suggested before that the 9mm be more accurate and less damaging than the .45 colt."
Good idea, .45 ACP is a much heavier and wider bullet than the 9x19mm round, and as such is less accurate and more powerful. Also note, the magazine capacity of a .45 auto is likely to be around 50%-75% the capacity of a 9x19 firing weapon. The 9x19 will be more accurate, less powerful, and have a larger magazine of course. 9x19 ammo should be cheaper than .45 ACP.
A few likely candidates for a poor left wing organization, from most expensive to least.
Colt Government Model 1911 .45 - 600 USD
Glock 19 9x19mm - 500 USD
Hi-Point .45 - 150 USD
Hi-Point 9x19mm - 150 USD
There are dozens more guns I could think of, but you don't give a shit.