This is not just a bug, but... a condition, that may be a result of a bug or just another similar condition.

Steam arrows work in the exactly same way as fire does in this game. There is no difference at all.
And the damage is as preposterous as that done by fire. It functions in the exact same way. No difference whatsoever.

You, or enemies - get multiple damage hits for every single step taken inside its radius.
+ Once you are burning - every step creates another set of fast hits of damage.
+ it lowers the fire resistances into negative numbers too.

Just as burning with ordinary fire does, regardless of what resistances i had before that. Baring only the resistance of 100 i guess... but i haven't tried that myself.

A ranger with enough steam arrows can go through 90% or more of the beta content - easily.