I run the same Aimpoint optic in 3-Gun competitions. I have it zero'd for 250yards, at which distance my groups are under 2". I can make hits routinely out to 500M+... last week I made first-round hits no problem on the clock on a 425 yard target at the USPSA MultiGun Nationals. If you have the skill and normal eyesight, making hits on a man-size target with a non-magnified red dot is perfectly feasible out to the maximum effective range of the 5.56NATO round. For many shooters, magnified optics are a crutch.
Some tips:
1) Use a round target a little larger than the dot at your chosen distance. At 200yards I like using the NRA High Power target that simulates a 600yard target... the dot fits snugly inside it, making it easy to center the dot perfectly.
2) Turn the dot brightness down as low as possible while still remaining visible (2 or 3 clicks below maximum brightness works well for me).
3) Wear clear shooting glasses; your pupils will close down, which makes the dot look crisper.