https://www.xbox.com/en-US/developers/Rules
Halo: The Master Chief Collection & Halo: Combat Evolved © Microsoft Corporation. "Halo 2/3 M7 Caseless SMG" was created under Microsoft's "Game Content Usage Rules" using assets from Halo: The Master Chief Collection, and it is not endorsed by or affiliated with Microsoft.
Thanks to PlayBONK for the animation work!
“Continuing Misriah Armory's long line of weapons that are questionable at best, and suicide assistants at worst, the SMG is no doubt one of the finest examples that humanity needs to face extinction.”
The M7 SMG comes in a secondary, primary, and dual wielded variants and will appear to other players as the SR2 (Heather SMG).
All variants of the M7 Caseless SMG are unlocked at level 40.
The primary M7 SMG will appear in the special weapons tab and benefits from assault rifle/SMG skills.
The M7 SMG is a close range bullet hose: forget any notion of precision or long range combat, shove the M7 in enemies' faces and hold down the trigger for the best results. To assist you in replicating Halo gameplay, the M7 Caseless will penetrate enemy body armor so you aren't out of luck when your bullets inevitably miss their mark.
Stat Notes:
Spoiler!
As a weapon, the M7 SMG is somewhat underpowered, true to how the weapon performed in Halo.
The biggest "advantage" the M7 Caseless has is in ammunition. You have a fantastic ammo capacity in 60 rounds per magazine, 4 total magazines of ammo (240 total rounds), and a very generous ammo pickup of 6-12. I wouldn't be celebrating if I were you, you'll need all of this to combat the large amount of ammo you'll be wasting with this inaccurate bullet-hose.
The M7 SMG also pierces through the Tan Cop body armor to help you spray down enemies with no precision. Although you can successfully aim for the head with the SMGs (or shove the weapon into enemies' faces), it's not really in the spirit of the Halo 2/3 version of the SMGs.
As a Halo weapon, there aren't many attachments available.
You get muzzle attachments, but no optics or gadgets.
The Dual Wielded M7 Caseless functions similar to the is single variant as a highly inaccurate bullet-hose, but with the ammo pickup tweaked to 6-10.
Known Issues:
The dual wielded SMGs have a broken magazine animation.
Probable Future Asked Questions:
Q: Where is the primary M7 Caseless SMG?
A: The primary M7 Caseless will under the specials tab of primary weapons and benefits from AR/SMG skills. This should remove the need for custom categories for custom weapons.
Q: Can I have optics?
A: Do you really need your LPVO on a weapon restricted to barrel stuffing range?
Q: You remembered that you used to be the Halo weapon guy instead of the cocaine warfare weapon guy?
A: Yeah, I know.
Q: REEEE insult to rifles replacement is 2 STRONK/2 WEKK! Pls nerf/buff!!!!!
A: What are you, some Halo pro that complains about how automatic weapons have no place in halo despite automatics being worse than precision weapons throughout the series?
Anyways, go into the main.xml and change the stats yourself. Be careful when editing the xml, I am not to blame if your edits cause the xml to break.

The Akimbo SMGs intentionally do not have the ODST ammo.
I know it is perfectly doable to aim for the head with the akimbo M7s, but the ODST ammo is my poor programmer's attempt to say "use this to make the weapon perform similarly to how it did in H3:ODST". I didn't see the point in giving the Akimbo M7s the attachment that makes it perform similar to its depicion in H3:ODST, when the dual wielding wasn't allowed at all in H3: ODST.
If you feel that the lack of ODST ammo on the Akimbo M7s is a mistake, you are free to give the akimbo M7s the ODST ammo by commenting it in the main.xml. I don't plan to update this weapon until I learn how to make the ODST suppressor also a laser sight, so your edit should be safe for a long time.
First, go the main.xml document in the SMG's folder.
Then, find the "wpn_fps_m7caseless_odst_am" weapon mod.
Then, where it says <weapons>, paste "<value_node value="wpn_fps_x_m7caseless"/>" underneath the <weapons> tag (without the quotation marks).
If done correctly, when you reboot the game, your akimbo M7s will now accept the ODST ammo.