I think it would've been better if you could 'charge up' the VATS targeting, letting you spend additional time and AP to get a better chance to hit even a distant target.
Maybe make VATS drain AP constantly while active but being more accurate, giving you less time to aim and decide but still being useful as the 'careful shot' method instead of the rapid reflexes FPS method.
It just seems like a lackluster mid-way point currently, I'd prefer if it was just straight up AP->Bullet Time instead of an annoying VATS wannabe.