Purpose

The Pallet Rifle was designed as a modest weapon to arm civilian, police, and paramilitary vehicles. It is a low velocity, short barrel weapon designed to have limited military effectiveness, but remains a viable tool for paramilitary and lower-level operations.

Deployment

Any vehicle or mecha that mounts an AC-5 can have it replaced with a LAC-5 with no difficulty. Any mech or vehicle that mounts a PPC or similar heavy energy weapon can likewise easily swap it out for a pallet rifle.

The Armed Forces of the Atlantic Federation makes extensive use of pallet rifles, most training mecha and vehicles are equipped with these guns as they are easy to maintain and ammunition is cheap, allowing for more extensive training. This is a common theme in AFAF training mecha and weaponry and is also the origin of weapons like the Light PPC, Light Gauss Rifle, and Pop-Rocket launchers.

The Eurasian Alliance makes regular use of pallet rifles as a heavy power armor support weapon, with two troopers manning the weapon.

The Wastelanders adore the pallet rifle as they are cheap and easy to manufacture and support. They also include specialty munitions like chemical and gas rounds, incendiary rounds, chaff rounds, and pallet grenades, man sized stick bombs that are breach loaded into the pallet rifle and then fired like rifle grenades. Compared to this, the only variant ammunition commonly available is the paint round.

Air mobile mercenary and other military forces have limited adoption of pallet rifles for their rotorcraft and hovercraft, as these machines tend to be fast enough to manage the shorter range of pallet rifles, and make better use of their lighter weight. 

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The pallet rifle gained its odd nickname after it was extensively used in containing a dimension fatigue event in Australia. A joint force of Nipponese, Australian, and NorthAm forces fought to put out an infestation, and most were training and guards units equipped with large numbers of the new training weapons.

I might as well have my men armed with pallet rifles, we're burning through pellets of ammo and not even slowing these monsters down.

And thus, through a typo, the pallet rifle earned its name.