Where do all the bullets end up?
Do they kill people on the ground?

Almost certainly a few do.
People struck by falling bullets are more likely to die than people shot directly. The chances of a particular bullet falling onto a person are very small but over the decades, many many bullets have been fired by aircraft.
Handgun bullets

Between the years 1985 and 1992, doctors at the King/Drew Medical Center in Los Angeles, California, treated some 118 people for random falling-bullet injuries. Thirty-eight of them died.
Bullets fired into the air during celebrations return at a speed fast enough to penetrate the skin and cause internal damage to other organs in the path of the migrating bullet. The bullet’s velocity required for skin penetration is between 148 and 197 feet per second. A velocity of less than 200 feet per second, which is easily obtained by a celebratory gunfire, is capable of fracturing bone and even causing intracranial penetration [4]. Spent bullets have the capability of reaching up to 600 feet per second during their downfall, and thus they have the ability to inflict damage to multiple body cavities [4]. The larger caliber bullets (ie, .45-caliber) reach a higher terminal velocity compared with the smaller caliber bullets (ie, .30-caliber), because of the proportion of their weight to their diameter [4].

From http://www.annalsthoracicsurgery.org/article/S0003-4975(06)00831-9/abstract


For those hit by falling bullets, the chance of the wound being fatal was far higher than a typical shooting. The hospital put deaths from regular shootings between 2% and 6%, while for those struck by falling bullets the death rate was close to one third.

From http://www.theguardian.com/world/2011/aug/24/how-dangerous-is-celebratory-gunfire

Aircraft rounds
These falling bullets were from celebratory gunfire, not fired from aircraft.
Aircraft cannon fire projectiles which are often much heavier than handgun rounds. If one falls on you, the likelihood of injury or death must be higher.

.22 Winchester magnum rimfire and .50 Browning MG rounds at same scale. source