Great! I'm glad you got this worked out, WiS, it's a much-needed ability, I think.
EDIT: Quick observation. I thought these looked a tad expensive at first, but I reckon thinking about it that they would be very useful in a tight spot, I don't suppose you'd madly cook up heaps of arrows in advance. (I always seem to have the odd portion of glow dust and elemental salts knocking around anyway.) So rather good spells for a stealthy archer type who already uses Alteration spells instead of lockpicking, I think. And carrying various batches of different magic arrows is a pain.
Oh, and a Frenzy one would be rather good. Not to speak of the Arrow of Friendship (which heals the target)
There are several mods that add new arrows or spells to conjure them, but none like this except LAME, so I thought it would be a good addition.
Yeah, I was concerned about the pricing too, but that's (partly) why you can only make 1 at a time (the other part is the Magicka cost). I'm hoping the cost/rarity of ingredients balances them out a bit.
Ooh, Frenzy. I didn't think about that. Shooting someone to heal them is very ironic.
Sounds very cool! Not playing Oblivion at the moment, but I'll keep keep it in mind for when I will again!