because you're calling "Reload()", and Reload() is a coroutine, your coroutine starts running separately to your main "Fire" function, and your "Fire" function is free to continue executing at full speed.

If you want your firing to repeat, with a certain delay between every shot, while the fire button is held down, you could use something like this:

function Start() {
    // start up the shooting timer coroutine:
    ShootTimer();
}

function ShootTimer() {
    // a repeating test to see whether the user is pressing fire
    while (true) {
        if (Input.GetButton ("Fire1")) {
            Fire();
            yield WaitForSeconds(reloadTime);
        } else {
            yield;
        }
    }
}

function Fire() {
   // perform one shot (raycast, particles, etc),
   // but no reload timing goes in here
}

Alternatively, you could use the more "traditional" approach instead of coroutines (which can sometimes be simpler to understand), where you measure the amount of time elapsed since the last shot yourself:

var reloadTime = 0.5;
private var nextFireTime = 0.0;

function Update () {
    if (Input.GetButton ("Fire1") && Time.time > nextFire) {
        nextFireTime = Time.time + fireRate;
        Fire();
    }
}

Just a guess:

You didn't post your Update() function or the function where you actually fire your weapon (where you call your Fire() function. By looking at the above code, could it be that you can even fire without any ammunition? Possibly add an if statement that you can only fire when a bullet is loaded. What you have up there is simply the WaitForSeconds() to reload. Your described behavior would result if you continuously fire your gun without ammunition and the reloading just happens without any consequence.