You know there are others like the Arrow of Speed, Jump Boost, etc. They could be used to give your friend a boost instantly, though from the arrow they might die if they are low
it still means the use is EXTREMELY situational, in that your friend is so low they need a healing item immediately, but not so low the damage would be fatal, and you need to be so far away you can't throw a splash potion at him in time.
Undead mobs get reversed effects from Healing and Damage effects. So shooting a Zombie with a Healing arrow would damage it. Shooting a Skeleton with a Instant Damage arrow would heal it
You forget that potions and potion-tipped arrows have the exact OPPOSITE effect on undead mobs. While this arrow is your worst nightmare in a 1v1, it's your best friend against zombies. It's basically arrow withering for them.