Game sound engine, lacks on features like echoes/reverberation applied real time on ingame audio. There is no difference, if you are shooting in the woods, in the city or in a room - all sounds literarry the same!
Also it doesn't matter, at what distance the player hears a firefight, 10 meters or 100, only the loudness reduces, no filtering applied at all.
Currently, all the echoes/reverbs are recorded within the audio sample, which doesn't sound natural at all, and can cause sound distortion.
Some of arma 2 mods, had already advanced audio system implemented, like H.A.R.C.P http://forums.bistudio.com/showthread.php?100253-HARCP-Dynamic-Sound-System
Videos from that mod:
J.S.R.S. includes distance audio script, and indoor reverb.
Video, that shows distant script in action
Video, that shows indoor reverberation script