There are hundreds of people playing MTA at the moment - if it was "unplayable", do you think they'd bother?
Many people seem to forget that MTA is a beta. GTA isn't even designed for multiplayer so the fact that it even works is amazing. Also, MTA is not like other multiplayer games because a large amount of processing is done on the clients' PCs, rather than the server. This is the cause of many of the problems with MTA such as the issues you described, and it also makes cheating easier.
There are lots of factors affecting your problem, such as your connection speed, your opponent's connection speed, the server's connection speed, you and your opponents' PC speeds, etc.
Users with slow connections are difficult to kill because it takes a long time for the packet from your machine saying that you're shooting them to reach them. In the meantime, they've been travelling at normal speed on their machine and so are no longer there when your packets reach them, despite the fact that the bullets on your machine hit them instantly.