First off, from a Federal point of view, full auto firearms are legal. It is only some States that don't respect the 2nd Amendment that make it illegal to own them. The biggest problem with full auto firearms is that no new full auto firearms are allowed to be transferred to civilians since the mid 80's. This means that it is very expensive to buy one of the firearms that is transferable, it isn't uncommon to see a M16 sell for $20,000. The process to take ownership isn't all that bad. Fill out the Form 4 or might be Form 1, I don't remember off the top of my head. Get your local Sheriff to sign off on the paperwork and get fingerprinted. Send the forms to the ATF along with a $200 check. Then wait for the ATF to approve, which they routinely do. Then you can take ownership of the full auto weapon. I've done the process for a short barreled rifle, but haven't had the money to do an automatic.
As far as what should be legal, I'd say any single man portable firearm fits the definition of the 2nd Amendment. Which would exclude grenade launchers, missiles, but would include things like M4 rifles.
The 2nd Amendment doesn't need to be redefined to include self-defense. It serves a variety of purposes and only gun banners have tried to pigeon hole the meaning. It covers self-defense capabilities from criminals, self-defense capabilities from government, sporting purposes, and hunting.
The only line that has been crossed with the 2nd Amendment is by groups like the Brady bunch, Bloomberg and other vocal gun banners.