I think this is just the bullet penetration system at work

Bullets do penetrate materials.

Guys look at the wall no print of bullets. It's definitely not a penetration system.

http://www.youtube.com/watch?v=NX8VuPZA7PE Same porblem in Arma 2

Watch this video, that's how it should be. Prints on wall and no penetration, because the wall is too thick. http://www.youtube.com/watch?v=-CeAZHj4KqY

https://www.youtube.com/watch?v=cix07R1vlhI

Chairborne, try shoot through corners and compare the difference. In this http://www.youtube.com/watch?v=Y-HxQddJ2NQ video bullet flies through the wall without hitting it, in ur video bullets are hitting each walls.

http://www.youtube.com/watch?v=NH6H7qrjKDo with ballistic mode especially for Chairbone

Yeah, voted up. Though not sure how easy this would be to fix really.

Could it be that the muzzle intersects the wall in one case and not in the other?

Chairborne, maybe you're 100 times reconsider video and stop writing some nonsense? If you watch video again you will see that on wall no traces of bullets. I don't understand why BIS not fixed this old bugs. But they make some crap things as fatigue.

I didn't mean to hurt your feelings ma'am.
I'll show myself out, have a nice day.

Another indication is that my character will says something like "Machine gunner at 200 meters front". But all I can see is a stone wall. Definitely a player graphics to AI detection system mismatch. That AI then proceeds to kill me.

It may not happen at all angles but is seems common in some urban missions I have. When I die and float around I can see that he should not have been able to hit me. This is single player.

It might not be possible to fix but it is damn frustrating. Especially when I disable the AI chatter so I don't get my character blurting out that he can see something I can't.

The muzzle intersecting the wall/door is a different issue. We can see the weapon coming out of the wall/door frame. They can shoot us even though the AI's body isn't visible, just his weapon. And I can never hit him until his body is visible. The only option is to fall back and wait for his body to be visible.

One thing to be tested in debug console:
0 = [] spawn {while {true} do {hintSilent format ["%1 ",lineIntersectsWith [eyePos player, ATLtoASL screenToWorld [0.5,0.5]]]; sleep 0.5}}
What is returned for these places & conditions?