If you are getting 1.25 inch groups with a M/96 Swede, you are doing all right.
50 years ago, the "Standard" for Sporting rifles was a two inch, five round group. This was acceptable hunting accuracy. Today, we have factory production rifles that are "guaranteed" to shoot three round groups of under one inch.
What you have is really a "Sporting" rifle, for shooting Big Game. The accepted standard killing area for a Deer is usually a 12 inch circle in the heart and lungs area. This is still true today as it was back in the 1900s or 1950s as Deer have more or less stayed the same size. No matter what you see in the fantasy of television outdoor programs, the PRACTICAL killing range for a Big Game animal is 300 yards with most of our cartridges today. In fact, from experience over 60 years, hunting across this Country, about 85% of my shots have been less than 100 yards. 300 yards translates to a 4 inch group at 100 yards and if we cut that in half to allow for aiming errors, we still end up with a two inch group.
Perhaps these Gun Makers of older years knew a bit of practical accuracy when they accepted two inch groups for a standard.
The m/96 Mauser design is over 120 years old; if we accept the m/94 Carbine with the same action as a starting point. Actually, we should include earlier Mausers in this as the m/94 and m/96 were small modifications over the basic design. It is not quite reasonable to expect the same accuracy out of a rifle of this old design as compared to a modern rifle that incorporates all the improvements that has been learned over the last 120 years. If this is expected, then we should all be driving Model A Fords at 150 km/hour today.
We also have to look at the INTENDED use for such rifles. They were designed to be fairly simple and robust, to be used (and abused) by ordinary Soldiers, on a target that measures about 18 inches wide and 66 inches high. We also, to get a clear idea of these rifles, have to go back in time to a point in History that they were conceived and produced. At that time, Military Rifles were one of the most highly developed firearms that were made for that INDIVIDUAL Country's needs and purposes.
As an example of this thinking, let us look at the Italian Carcano rifle, a firearm that many regard, even today, with a bit of looking down at. BUT, for the time, use and purpose, the Carcano was an ideal Military rifle. Before 1900, when we look at Italy, just where did a real or perceived threat to that country come from? The answer to that is Austria. What Italy needed was a small calibre rifle, with good long range ballistics, and an adequate bullet that would penetrate an Austrian Greatcoat, in the Mountains. The smaller cartridge allowed more ammunition and supplies to be carried under these conditions, while giving more than adequate ballistics and penetration.
Too many people today tend to compare our modern firearms and their advantages, with older designs and makes of weapons. They also expect to get the same results, but it is in most cases, simply unreasonable to expect present day standards and performance from these older but still functional pieces.