I am a proponent of short scopes for combat exactly for the reasons you've listed. Set it on 1X or 1.5X for contact distances and crank it up to 4X for longer ranges.
I have one AR set up just as you describe, and for the same reasons. It does work well, but to be "perfect", something like Trijicons Accupoints would be the ticket. Scopes lacking night or low/no light capability are at a disadvantage to the red dots.
Having both, the red dots are still my favorites for all around use. I am thinking about that Trijcon though.