Again, it's a matter of economics. Police departments buy firearms and ammunition en masse most of the time and if they don't have a handgun chambered in 10mm, why would they get a submachinegun or carbine chambered for that round? They'd rather have a gun that is either a full sized rifle (AR-15 of some sort), a 12 gauge shotgun, or if they have to have a pistol caliber carbine, a 9 or .40 to match their sidearm so if things get heated, they can change the bullets out. This is why the Cx4 is becoming so popular as a lot of PDs carry Beretta 92 or 96 pistols and they can just buy the same pistol mags for their carbine.
Even in cases where individual officers have to by their own weapons, they still won't opt for a 10mm carbine or submachineguns because the ammunition is highly priced and not very common, and they have to pay out of pocket for that.
I seriously doubt that 10mm could be considered a PDW cartridge no matter how much engineering is done. Armor piercing rounds could be made but that will just raise the cost of ammunition, and despite the amount of damage it can do or it's range, it still pales in comparison to an actual rifle. That being said, if a cop has to choose between an MP5 that has been engineered away from it's original design to take a more powerful handgun cartridge which may or may not have good penetrative powers against soft targets or body armor, and an AR-15 rifle in a more economical, 5.56 caliber round which can penetrate body armor without question (with AP rounds) with a design that was built to take the cartirdge, and is incredibly common and easy to learn to operate. Oh yeah, it's got far more range and less recoil too.
10mm is, has been, and will remain a low key, cool guy cartridge that only real hardcore gun enthusiasts know about or truly admire, it's not meant for large scale law enforcement or military purposes. If it was, it wouldn't have flopped when it was introduced. That's not to say it isn't a good round, though.
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