I recently played in a public Zeal Duels server that was hosting this build. I recorded a few of those rounds (but only one of them is published so far). Video footage:

• https://www.youtube.com/watch?v=IlBhBdpSOrA

Some findings so far:

• Playing with all 3 reporter settings (shooter, server, victim) can make the game quite messy in the sense that it will become a lot harder to evade any bullets at all, since you'll account for multiple perspectives at once. Basically the more settings you enable, the higher the total death count in general, based on anecdotal experience in-game.
• I haven't got to test the shooter-setting or a combination of shooter- and server-settings yet, but I predict that would make players complain the most about "airhits" since those hits registered are the least likely to be in sync with which bullets hit you on your screen as a victim.
• Playing with server- and victim-settings enabled seems like it might be a combination that would make players complain the least, since at least that way a client should not be able to "ghost" a bullet that clearly hit them on their screen. Now I'm wondering does this also prevent the "bullet bounce" bug from happening locally? If so, that could eliminate complaints about enemy players bouncing off bullets that clearly hit them from a shooter's perspective.
• On the other hand, when playing with server- and victim-settings enabled, from the shooter's perspective there may be situations where a shooter does see an enemy getting hit from their bullets that didn't even touch on their screen, but the shooters are less likely to complain about cases where an enemy unexpectedly took a hit from their miss, than victims who clearly evaded the bullets on their screen.

EDIT: Oh and one more thing, that probably does not happen in the above video but did happen in some other rounds I played in; It happened me multiple times in a round that I took hit quite at the same time as I collected a carrot to regain health. Now it seemed that my health went out of sync with the server, since my game showed my health as 1 after taking the carrot, but I didn't die from the next hit I took, and my health was again 1 or 2 (don't remember which one exactly). I haven't looked at the code personally, but could it be, that there is a corner case where a client registers a hit on themselves, while the server does not see it that way, but instead sees them take a carrot, thus the health goes out of sync between the client and the server? Or is this business as usual in JJ2? Just guessing...