First off: I overall get your point. The DPS plateau between 0-10m does have advantages, but...
The game's logic is the other way around actually. SMG weapons have the biggest advantage at range 0, and they get the 0-10 range base DPS as a weapons profile bonus so that they do not have to close in all the way to enjoy that advantage.
Sorry, but no. This is semantics. Maybe I misread what you wanted to say, but the way I read it, you're saying that SMGs work best at range 0 and the plateau to range 10 should be considered a special "bonus" that they get. That's not the case. SMGs have been balanced around their current profile. If they did not have the plateau at range 10, they'd probably get less DPS at range 10 compared to current with higher DPS below 10m to even it out. Basically like all almost all other DPS curves. There is no special "bonus" because of that. As a result, SMGs currently have their highest DPS at range 0-10, but the biggest advantage at range 10, diminishing in both directions.
This logic makes sense, otherwise SMG profiles wouldn't have a natural advantage (besides raw DPS numbers) over standard small arms weapons that also have the highest DPS at range 0.
Again, there is no "natural" advantage in a weapon having this type of DPS curve. Just like you want to bum rush Grenadiers with any SMG squad, you also want your Conscripts as close as possible to the Grenadiers. The specific type of curve does not matter for creating engagements that favor close or far range engagements. What matters is that you do more damage. The only odd thing with SMGs is - as already pointed out - that your advantage is the largest at range 10 and not at range 0.
This way staying at 1-9 range is advantageous for SMGs, while technically being at lower range would be more advantageous for the regular small arms weapon it faces. And it also means that they can stop a bit further away, for faster full accuracy and to create some wiggle room for manoeuvring (not having to cross red cover etc).
What's lacking is presentation obviously, because this isn't communicated to the player. And on top of that 10 range is also a danger zone, because it's really hard to judge the range ingame and it's the range at which cover bonuses start applying.
That's the point I fully agree with. It can be advantageous to stop early for full damage. But that's about it. If that is really the only reason, it could be solved with tweaked movement modifiers though. Removing the need to fully close in (because of red cover as you mentioned or other disadvantages) surely makes SMG squads stronger. On the other hand I'd argue that it counter acts a fundamental game mechanic then. Why should the squad not be punished for choosing a sub-optimal approach path?
Just to point out the issue I personally have: From a logical/intuitive perspective, there is no reason why a squad, especially one with SMGs, should actually get worse outcomes the closer it gets to it's target. It is still winning, but you're actually doing slightly worse. Why?
The issue is not huge since your squad is probably running away anyway once SMGs got too close, but overall it is an oddity that maybe could be removed in CoH3.