One of the old "Rumor Control" things about the AUG was it was rejected because "you couldn't do drill with it". More likely the plastic construction and the rather odd trigger mechanism (squeeze for single shots, snatch or pull the trigger to trip the automatic sear) may have been the contributing factors. I had a chance to try one in Cyprus, and rather liked it on short exposure, but not long enough to make any definitive judgements.
Another rumor I heard was the AK-74 was the control weapon, and it was, in fact, superior to all the other candidates. Once again, it is more funny than true (a Galil using an AK action is far more accurate than the real thing...)
It would be interesting to see how the upgraded versions of the C-7 compare to newer weapons like the FAMAS G-2, FN-2000, H&K G-8 etc.