So, you want the SMG to be an alternative to the pistol. As already said, I have only limited experience with the later stages of the game, but I felt I already used the SMG well as an alternative to the pistol as it is. Where it fell flat for me was when there was no early energy-based version of it when energy by and large is preferable to kinetic due to less resistance on the alien's side. But just comparing kinetic, by taking an SMG instead of a pistol you trade in damage and mag capacity for the chance to suppress. As always, you need to build your team around that, but it is definitely not as if the SMG is inferior to the pistol. I like to run assault rifle squads, and these rifles are my main source of damage, usually. For that to work I need some shielders to protect the defenseless rifles until they get close enough to reliably hit. I can (and do in the early game) suppress with LMGs and then get close, but I could also see myself swapping one of the two LMGs I currently bring for something else, if I have the close range suppression capability of two SMGs on my shielders instead.
Sure, that's not perfect for every situation, especially on open maps like desert or arctic I would still prefer LMGs, but for towns and jungles I'd switch anytime.
What I mean to convey here is that since pistols are a reflex bonus close range damage centered weapon, SMGs should not become the same thing. If a pistol is the close range counter part to an assault rifle, the SMG is the same thing for LMGs, and that is a good thing that should be preserved.
I could also see myself utilizing the reflex bonus of a melee weapon in the main hand with an SMG in the off hand for suppression and damage. If it now additionally gives TU drain (SHOCK or what did you call it?), all the better for me.