I've never put a scope on it so I can't tell you what sort of groups it's mechanically capable of. 1-2" groups at 100yd are not uncommon for .223 Saigas with the right ammo and a good magnified optic. Shooting with iron sights, it's not much different than my 7.62x39 AKs, with all of which I can usually manage fist-sized groups at 100yd.
As far as ammo goes, it will shoot just about any brass-cased ammo I've fed it. It does NOT like XM193 5.56 NATO, which is loaded very hot and tends to overgas the gun, but I have heard that the gun can be tuned to work with it by swapping in an extra-power recoil spring - sort of similar to adjusting a buffer tube in an AR.
The only problem I had shooting brass ammo with was that when feeding a round, the bottom of the bolt would occasionally bite into the soft brass case of the next round below it, moving it forward in the magazine and causing the gun to feed two rounds at once. This was eliminated by slightly chamfering the leading edge of the bottom of the bolt. It was very sharp compared to three other AK bolts I had to compare to. Since chamfering this edge, I no longer have this problem. By doing this you don't want to remove any material from the face of the bolt or from the bottom of the bolt. You just want to dull the edge slightly so that it doesn't bite into brass cases. Not a very common problem with these guns at all - just my luck I guess.
This problem was also exascerbated by using Beryl mags, which sit quite high in the receiver, but are otherwise excellent quality and fit very tight - in fact they can work without a bullet guide. It may not be a problem with other mags from Promag, SGM, or Tapco. I previously used surplus steel Galil mags, but they sat too low in the receiver to be reliable. Those mags tend to launch bullets at a sharp angle upwards, turning the bullet guide into sort of a launching ramp, rather than a slight assist to guide the bullet towards the chamber.
Steel cased ammo is no problem, and the gun loves Wolf MC and Wolf Polyformance, both 55gr and 62gr. HOWEVER I have had poor luck with Tulammo/Herter's. Many of these are loaded weakly, with cases being routinely out of spec enough to jam in the chamber. This is a pretty common problem with Herter's/Tulammo in other types of .223 rifles as well, so not an isolated AK-specific problem.
Hope this helps.