I guess if my teammate is getting melee'd or if I'm within melee range of a rock but wep1 on mode 1 is sufficient enough for those situations.
And I've never had any ammo problems with it yet. It doesn't have the ammo to blast away but I usually pick my shots and let the funnels finish them off.
You could kite with wep2 on mode 2 but it seems much more effective to stay at a flashlight distance especially when the skills kick in. Or am I underestimating mode 2?