Not sure if this is a bug or is working as intended, I would however say it's not really ok as it is.

Enemy Ghost takes turn. Player Engineers blind the Ghost using Flash Bomb. Enemy Zombie uses Pass ability and gives action to Ghost. Ghost is now blinded for 2 turns, and is yet to move. When her turn comes, she can't take action because of blind but she still remains blinded for 2 turns. Thus, we can say the Ghost was blinded for 3 unique to her turns - instead of just 2.

but the ghost wasn't blinded for game 3 turns, it was blinded for 2 game turns and 1 was because the ghost received a second action within the same turn. It seems ok to me, maybe it was meant to be like this. or maybe it wasn't :)

I reached Tungsinn today and had the same problem. I load an older save but game crash whenever I left then return to Tungsinn. This is very frustrating.
I'm playing on Win7.

Same thing happened to me a lot of times, especially when fighting wolves - I even took a screenshot. My slingers were still able to attack the enemy bears, when they shouldn't have...

For some reason there is now trotting sound when walking on the lighthouse island on the first island. Is it just me?

Are the units using skills? I've noticed that the game often doesn't consider skills to be attacks for the purpose of what unit the AI can use something on.

^ What Loopy said. Skills seem unaffected by Fear. Makes it a bit less useful.

That doesn't seem to be the case. I tested on some snakes, who have the Strike ability. When feared, they neither attacked nor used that ability to attack. So there must be something else affecting things.

edit: Another test vs Catapults did have them attack my Rune Mages (with their special attack), so the bug is definitely present in some form.

I think it may have something to do with a skill being AoE or Magic vs a more standard attack skill, the former seem to generally not be prevented by Fear and can ignore Target. Damned orcs shamans with those astral spells.

I just added the Troll's pacify ability not doing anything (missed that earlier).

That fear thing is really vexing. We haven't ruled out that it just doesn't work on ranged attacks, though, have we? Have you ever seen a ranged unit attack with a normal shot while under fear? I think I saw the catapult use his fireball so that would be consistent with the theory it can still use AOE attacks (possibly ones that don't directly target the feared creature). If that's what it's doing, I wonder if it's even possible to fix it.

And about the "pass" ability, if it doesn't decrease counters than I guess it's not as good at the Jarl ability. I guess the subtle difference is the zombie is transferring its own action points whereas the Jarl's say they give you another action. That's splitting hairs, isn't it? lol