Energy is indeed conserved, but most of the chemical potential energy in the propellant (and primer ...) is immediately converted to heat. The remainder, of course, transferred to KE of various things including the bullet, powder gases, BCG, rifle itself, etc. No argument there.
But conservation of energy doesn't govern the relationship of the recoil impulse to the velocity of the bullet. That's conservation of momentum.
Ok, I see what your point was now. Yes, in a closed system, momentum is conserved just as energy is conserved. No argument there either. Have to be careful that its a closed system and not a squishy one. :)