I have the same gun/scope combo.

Why it is doing that?...
Those slugs you're using are on the heavy end of the spectrum of available 12 gauge sabots, so I would expect some serious drop off like you're experiencing. You just can't stuff enough powder behind a 1.25oz slug in a 2.75" package to keep the velocity up to deal with the awful balistic coefficient that 12 gauge slugs have to deal with. So, there's my input on the drop, but the group size depends completely on how that particular ammo shoots in that particular gun. If it won't group well, find something else that will.

Whatmight work better in your gun?...
My 870 loves the Remington CorLokts, Copper Solids, and Winchester Supremes, all about 385 grains, going 1,900 fps from a test barrel. If I zero @ 100yds, I won't be more than a few inches high all the way out to there, and then no more than a few inches low out to 125. Haven't shot past that yet, but I don't plan to in the field either. When I do my part, these combos will give about 2" groups at 100yds, and single ragged hole at 50yds.

Terminal performance of the lighter slugs?...
I had a Win Supreme do a bang up job on a doe at 125yds last January. Put the crosshairs high on her back, dropped it in just under her spine, penetrated fully to provide 2 bleeding holes for trailing, expanded fully blowing a 3" hole in each lung,rupturing the aortic artery, and the jacket separated from the core providing a secondary wound channel more forward in the chest. Deercrashed while runningafter 90 yds at full sprint. Not one bite of lost meat. I've heard that these fast slugsmight not be the best for up close because of a lack of expansion, but I have not seen this first hand.





Good luck.
If you like the heavier slugs, just stay within a limited range where they group well. I'm sure they'll hit plenty hard if you can get them in the right place.
I hope you find what works for you.

-Bulz