I'm searching for a definitive answer on this but judging by the comments, I think what many people miss is the distinction between hip fire and aiming down the sights. I highly suspect that VATS only uses hip fire, so it's terrible with a gun that's moded for long range aiming, such as sniper rifles.
Guns moded for hip fire seem to perform much better in VATS. You CAN screw this up even with a pistol if you mod the pistol for longer range combat (scopes etc).
There's very little material on the subject from my Google searches, so I'm speculating. It makes sense though.