Anyone seen anything like this? I use a lighting mod which makes night and dungeons really dark, but torches are kind of clunky. I'm hoping something exists which causes enchanted weapons to illuminate an area around you.

I don't know of any mods that fit your description. However, if what you want is to easily navigate dark dungeons without having to sacrifice a hand in the process, you may want to try 'Wearable Lanterns' (available on Skyrim Nexus).