This is clearly possible as it was included in the below Arma II mod (Seems like several features from this mod were implemented but not the climb thing) :

http://www.armaholic.com/page.php?id=14012

I would really push for this one. It add a lot of possibilities in terms of tactics. You might need some limitations though (barbed wire, electric fence,...)

It's not a bug. Careless behavior is exactly what it means, careless :D.

Careless mode : AI moves at limited speed, weapons lowered, do not react if fired upon.
Safe : Exactly the same as Careless but AI will switch to Aware mode when fired upon.

Careless is here for editing purpose, forces AI to a non-combat behavior whatever happens

1. Burst fire in prone stance has indeed way to much muzzle climb. I think bipods are not implemented yet (only visually)
2. Reading the comments I'm not sure we're playing the same game...LMGs are made to engage infantry at 300+ range...M249 effective range is 800m...with current dispersion at those range it's just not possible o0
3. At 500+ range just forget about any supressive fire (in 2-4 burst). Shots land meters away from each other. I tried this several times in Coop.
4. I play the serie since OFP. I never fired a LMG so I don't know if that's more or less realistic but this definitely less fun...can't support my team from the back cause I have to stick to assaul rifle range.

I also agree that the prone stance with Bipod has way too much muzzle climb. Bust fire is useless and it's much more difficult to go back on target versious previous arma games.