I wouldn't want a 7" AR as my goto spoon, but as I tried to point out it's a range toy for most...and in a pinch I would not toss it aside for a knife in close quarters. Yep it'll be loud as hell and the flash will cover a small room, but that may offer an advantage since the operator would be expecting it. Ever see a badass mofo gang banger coward at the sight and sound of a lowly .22? Something to the psycho edge. Beside I won't stand in front of a 7" AR in a room. Who would?
Anyhow, I tried to stress the longer barrel in my original post and posted some velocity data for comparision. A 10.5" to 12.5" is the range one would want for an AR pistol to rely on.
Ugly? Well, it won't win any beauty contest, nor will some of the more popular weapons out there. Probably the biggest advantage of an AR pistol is the ability to have a barrel less than 16" without a stamp. Of course it is not smaller than some in its lethality range and sure there are alternatives, but the popularity of the AR is it's availability (parts) and simple design leading to a lot of home builds and easy customization.
Its ultimate purpose and use? Dream up all the scenarios you want, but if the SHTF I'll take a 12.5" AR pistol. I'll take a 5.7 pistol too, but since I know there's a lot of .223 and 5.56 ammo to be found out there my chances with an AR pistol are probably better.
In reality...they're all range toys.