"Oversized" weapons are pretty much par for the course in the "modern" 28mm range. What would be scale weapons look small and frankly larger weapons add to the dramatic flair of the figure. We've all seen sculpts by third tier companies that tried to go for realism and their weapons look puny and ineffective. Besides, who looks at a MC fig and says "That machinegune is waaay to big!"?
I see a lot of the wrapping of the barrel like you describe over here but I think it's more to keep dust off than anything else. Which leads me to a major problem with realism. Frankly if the corporate militaries are anywhere near as screwed up as real life militaries, one needs to paint them (regardless of where they are supposed to be fighting-i.e. desert, jungle or whatever) with half their gear for one environment and half for another one completele (dessert trousers and shirt with jungle flack jacket and shoulder pads). Better yet, devise a cammo scheme that works poorly in every environment. Make sure noone in the squad has a set that matches because even thought they've been fighting on Mars or Venus or whatever for a thousand years or so supply can't keep up with the changes in uniform regulations. This applies mainly to Capitol (just because their military is so freaking big) and Imperial (the beauracracy can't keep up). Bauhaus is too efficient for this to be a problem, Mishima doesn't believe in camoflauge and everything goes with powder blue metallic (Cybertronic of course). Brotherhood troops would get whatever they get because their dress code would appear to be black, white, or grey. The DL has no fashion code other than "worn when you are still alive and have not had time to change since you got killed/transmorgified" which works well for them. Arguably all my stuff is painted uniformly but I am hypocritical that way.
Sue me.