It's a mod from the russian forums. It lets you sacrifice some of the normal units you have to undead equivalents (sometimes its not really equi. but w/e). Like priest -> Ghost, Swordsman -> zombie, any archer -> skel archer, inqusitor->vampire, alchemist->ancient vampire, horseman/cannoneer -> black knight, archmage/shaman->necromancer, any dragons -> bone dragons etc. It doesn't convert ALL units tho. There was a more complete list in russian forums.
For the Dragon arrow replacing Fire arrow, I don't know. There's probably a way since Dragon arrow works like Fire arrow in the way that i gives the ability to the archer so yes, I would have to look. Bman would probably find a way in seconds since he's so awesome