I too feel the frustration, I think halo 3 was just a deeply flawed game, it didn’t use hitscan which would be fine if everyone was on LAN. The problem is it’s a huge disadvantage when lag comes in, to the point where games are won and lost on latency.
Where the frustration come in is it always seems to default to us host unless the entire game is EU. If there’s 5 EU players 2 east coast and 1 west coast I suppose the best average connection would be east US. I think a lot of the annoyance would be avoided by having a connection search option
If you played "that version of Halo of which we should not talk about here", more specifically BTB, you probably noticed you would get sniped across the map with the BR, which for me personally is not fun.
Now, for the other part of your post. I agree, I lost yesterday a couple of games because of lag. For instance, I couldn't finish one shots because my shots would not register, I would 4 shot people but nothing would happen and call me crazy but sometimes I have a strange feeling that the players are shooting faster than me even though we shoot at the same time, it's weird to explain, would take half a page to talk about it.
The problem with the servers is that, for example if a lobby has 7 EU players and 1 US player then that lobby will play on a US server (similar to what you said) which is ridiculous, because the opposite never happens.