The reason for the confusion is because [b]the military's definition "effective range" is NOT [i]fragmentation range[/i], but the longest range that they feel the rifle can still HIT the target.[/b]  The M16 is considered by the military to have an effective range of 550m vs "point targets" (men) and 800m vs "area targets" (tents, vehicles, groups of men, etc.).  The fact that the bullet does relatively little damage at these ranges wasn't a considered factor.

When the Ammo Oracle discusses "effective range", we're talking about fragmentation range.  The reason this is important is because someone shot in the torso inside fragmentation range (for whatever rifle/load combo you're using) is almost certainly going to be STOPPED (incapacitated; unable to continue attacking you), while someone shot in the torso beyond fragmentation range is often able to continue to fight for minutes, hours or days.

Believe it or not, until fairly recently, the military has not given all that much consideration to "incapacitation" capabilities.  The assumption was "if you hit the enemy, he'll go down".  We've been given a number of painful lessons that have taught us that this is not always the case.  This has lead to the recent investigations into ways of improving M16/M4's performance and fragmentation range.

-Troy