The atlatl (and "heavy caliber" 'dart points') served very well for a long span of time. As long as heavy game predominated, I would think there was little incentive to abandon the "30.06" (atlatl dart) for the ".223" (tiny arrowpoint)...
(It is enlightening and worth the exercise to look up the distance record for an atlatl dart throw...)
The arguement that the bow and arrow was initially used for small game and bird attracts my interest. For just the reasons you state, there was no crying need for arrows to bring down big game but getting squirrels out of a tree?