While just reducing long range damage somewhat is an option, I do think it could be interesting if the LMG damage was made to spread damage on the entire enemy squad instead of focused on a single model. Right now a big part of the power of LMGs is that they will very quickly snipe off members from the enemy squad, forcing shorter range troops to just run away because having half a squad in melee doesn't really help them. Spread the damage out and you'll instead have a much larger though lower health squad coming into melee instead, which could actually do something. It would also make MGs a bit more efficient against LMG blobbing, because right now the gunner just gets instakilled in a row because all the fire is focused on him due to him being the most forward member of the MG squad.
I'm not so sure about this idea. Evenly spreading out damage might sound good on paper, but in practice it was awful the last time it was tried.
In CoH1, squad combat was very simple, a full squad targeted one member of the enemy squad until he died, then the next, then the next, etc. When Opposing Fronts came out, Relic changed it so that every member targeted separately. The result was DPS being spread out so much that the first few seconds of a fight nobody would die, then with the final volley a squad wipe would occur. That wasn't a rare occurrence either, it happened constantly, I remember one instance where I had a 4 man PE Panzergrenadier squad with one pixel of health. Unsurprisingly, Relic scrapped that system and hasn't brought it back since.
Personally, I'm not to keen on the idea of spreading damage out evenly, because such 'squad crits' like that could easily return.