Break given. :o) The AK-74 is a better weapon for urban combat than the M-16, and as you say, the heavier round is not deflected by vegetation in a forested or jungle environment.
I will concede this: Out of the box, the M16 is a far better precision-firing weapon over 300 yds or so. But the M70 sniper system is obviously better still. For all-around usefulness, the AK-74 is the best.
And our troops seem to be voting with their shoulders, FRiend.....
A friend of mine was in Nam and said that he prefered frag grenades to his rifle because once a shot rings out everyone hits the ground and you end up shooting over someone (plus as you mention the bullets deflect in heavy foilage). Those frags are a lot more effective than small arms. He also said that you can take cover from bullets and feel sort of safe even when bullets hit close or zip by but nearby explosions are unnerving.
Just an aside he taped one grenade to him so he wouldn't throw his last one in the heat of things. He wanted to save one for himself just in case - he wasn't going to be taken alive if things got sticky. He spent all his missions behind the lines doing recon and ambushing and such. He had a camera with him and took some amazing photos. He smuggled the film out and developed it all when he got home. Those pics could get guys in real trouble if they ever got out - documenting things that aren't suppose to happen, etc.