Yeah - i'm never livin' this one down!!
I'm as tired of hearing the "arrow to the knee" line as anyone, but now that I think of wreaking avocado when I hear it, the annoyance has been replaced with a mental chuckle.
Back on topic with regards to Muffle...
Even without any sneak skill to speak of, having boots with Muffle in terrain which blocks line of sight gives you a nice advantage over opponents. You can get closer and prepare for combat without them noticing, or drink an Invisibility potion and get away or reposition without being noticed.