Awwwww.....I hope the developer that worked on this can get it fixed. :-(
We thought it would be so cool to have a torch with spell channeling in the game for role playing purposes or if you don't have night sight. All the regular ones drop to your pack when you cast a spell.
If you could post some more details (including screen shots, if you can get them) on what's happening that seems buggy, I'm sure he'd be appreciative. And make sure you use the Feedback form on the UO web site or the in-game feedback form if using the Enhanced client to report the bugs.