You still always come back to the fact that even if you kill a proven insurgent, the community will never see it that way. To them, you murdered Fred. And for every Fred you kill, ten more will take his place.There is counter insurgency that can be extremely efficient. Modern JDAMS along with smart drone technology can severely limit collateral damage on non combatant citizens.
There are smart munitions under development that can target an individual. Yes, the common bullet is an example, but the new munitions are guided from great distances.