It's just a lousy netcode issue. It's definitely better than the PC's netcode was, but it has similar problems. You're never going to be 3-shotting people in CE online.
I don't know why, but the PC release had unplayable netcode and now the MCC still has really bad netcode. The game wasn't developed with online play in mind, so it probably would have to be rebuilt from the ground up to actually work online. I'm guessing it's just impossible to add online functionality to the game and expect it to work at the same level as local/LAN play did on the original Xbox.
At least it's playable in the MCC, just not competitively. It wasn't even playable on the PC version (eventually the only populated servers on PC were no-shield variants, because you were lucky to land one headshot).