The M21 sniper system (NM M14 + ART I or II scope + XM118 match 7.62 mm ammo) was always more of a “conventional battlefield” precision rifle fire setup than one designed for the “classic sniper.” It rated right up there with the Soviet SVD system, although the SVD was perhaps inherently a somewhat less accurate system (although not by much). The M21 was (and still is) an excellent “600 meter gun” that with care, expertise and under the right conditions was capable of consistent 800 meter and better shots.
Both the M21 and SVD were products of their time (Cold War and tactical nukes) and primarily intended for the high-intensity, WW III battlefield where multiple precision shots fired from the same position would just be “lost in the background noise” of the rest of the combat: precision rifle fire at multiple high-value tactical targets at ranges of 4-600 meters in support of the regular infantry when faced with a massed opponent. Imagine the sniper team in an over-watch position of the infantry searching out and engaging individual enemy MG and AT teams along with key-leaders and other command and control targets (like RTOs, message runners, motorcycle dispatch riders, enemy scouts and recon, etc.).
In short, the M21 only ever needed to be as good as it needed to be for the “big Army’s” purposes. Sure, the majority of the training emphasis and effort for snipers was put into the “classic” stalk-and-hide tactics and long-range marksmanship since those are the hardest skills to acquire, but if the balloon had ever gone up in the Fulda gap, the vast majority of any “sniping” would have been of the “precision rifle fire support” type. For that, a 20-round mag with quick reloads and “point and shoot” with near “point of aim = point of impact” engagements averaging around 500 meters would have just been the ticket.
The M21 and SVD both fill that need very well.
No, I never saw any of the M14 rifle mods back then. I seem to recall that the Navy SEALS had modified a number of M14 with the idea of providing full-auto 7.62 mm fire support without the need to schlep around a cut-down M60. IIRC, their need was for something that was basically for short duration heavy fire support during “in your face, knife-fight range” CQB against targets that might be armored up with vests or behind cover. They, the SEALS, wound up with what became the MK 14 EBR (enhanced battle rifle). For them, it was a specialized solution to a very specific tactical problem.
The general SF fire-support requirement for most ODAs was quite different. The Mk 14 EBR was attractive to some of the SF units that had similar CQB missions, but the majority of teams are generally not looking for that kind of fight, so belt-fed full-auto (when full-auto is needed) was and still is a better fit. When most teams get in a fight, they want and need sustained fire power, and a magazine fed rifle cum MG isn’t the answer. In that tactical situation, it’s an evolutionary step back to BAR or M14A2.
However, when large scale SOF ops kicked off in Afghanistan and Iraq, the MK 14 EBR became much more attractive idea because of its longer-range lethality and hard, shoot through walls and doors punch. Thus, Army SOF with the rest of the “big” Army following took up the Mk 14 EBR idea by modifying M14 / M21 to become the M14 EBR.
This makes sense now because most of the combat in the Middle East is either short duration CQB against targets in a restricted urban environment, or engagements against targets across wide open areas that are taking cover behind rocks and ditches. The 7.62 mm selective fire rifle becomes a sound addition to a load out. Add to this that most units are mounted (or backed up with mounted support), so they still have their belt-fed full-auto capability available for those situations when sustained, heavier caliber MG fire support is needed. In short, the units don’t have to give up anything to add the M14 EBR to their weapons selection.