It kicked in seemingly at random, mid play, in Ustengrav. The first area it worked fine (shot quite a few arrows and they all worked), then after transitioning to Ustengrav Depths suddenly it's borked.
Nothing changed on my end: same bow, same arrows, same mods. It all still works when I revert to an earlier save, so that's what I'm going to do right now, but figured I should report this. Maybe someone knows of a fix so that if it happens again I won't need to start back in Morthal again.

I'm unsure if this is related, but I should also mention Ustengrav Depths loaded with the bunch of missing objects/textures bug when I went into it at first. I exited and reloaded and it was fine, but then it appears my bow and arrows broke.

