It's a pretty tiny round. Only guns that I know of that use it are the FN FiveseveN and the FN P90 smg (and whatever their equivalent semi auto civilian model is). There's been a lot of crying about it because it works like a rifle round, but is used it pistols. This is because rifle rounds are smaller diameter than handgun rounds and fire at a higher velocity in order to travel further. This design means that pretty much any rifle round out there is capable of defeating light body armor, due to the fact that they are designed to stop large diameter, low velocity handgun rounds. While the 5.7 is capable of penetrating body armor, it tends to not do shit once its through since it's not all that powerful, and its very small.
I want to say that some of the deaths there were from friendly fire, but I can't find any numbers to back that up. Either way, 30 injured but not killed is pretty amazing, could have been way worse with a different kind of gun, and its probably fair to say that the only people involved in this that would have been wearing armor were the police officers, and the reports are stating that only two of the people killed were civilians. Considering the guy reportedly fired off 100 rounds or more, and around 44 people were actually shot, I'd say the round is pretty well worthless.
Oh, and as for the CIA/FBI/DHS/whatever knowing about him and his ways months ago - that's fine, but without him actually doing anything illegal, there's nothing they could have legally done. I know this is a tragedy, but I agree with their inaction, as it falls in line with the protections laid out by the constitution. Preemptive action has no place here.
I think the most fitting punishment would be to force him to do his job, just without a gun or armor...