I personally think the change to semi autos was more driven by the perceived need to be better armed, than it was a true need. You have a high round count gun fight now and again, like the North Holywood Bank Robbery, and the Miami FBI Shoot Out. In both of these situations a Patrol Carbine was needed, and not a Hi Cap auto.
Didn't a ,38 end the Miami shootout?
And you're exactly right. A .223 or better yet, a .308 would have been perfect against riflemen in a car or bank robbers with body armor. Or a good shot with a Colt Python able to hit their face or neck.