It is NOT against regulations to use captured enemy equipment, it is common practice the world over. With the exception of ensuring every battle rifle they confiscate is safe, and the ammo (we had a penchant for loading VC ammo with plastique so it would explode when fired) is safe too, it may make sense to allow men and women in field a choice, BUT, gunslinger did point out that the AK is VERY distinctive in sound, as is the 16. Those sounds make a lot of difference when heard in combat. Lastly, the 16 fires farther (not a big deal in street fighting), is more accurate, and is less prone to barrel degradation in prolonged firing.
Make more damn ammo.
Ohh, and the most common weapon being picked up over there is the AK-74 NOT the 47.