'From the Shadows' notable bug

This is not a bug, this is the correct behaviour. Each of the gems applies it's transformation to the base stats of the passive.
Lioneye's Fall removes 16% increased physical damage with daggers, and adds 16% increased physical damage with bows. It also affects the other stats.
Cold Steel removes 16% increased physical damage with daggers, and adds 16% increased cold damage with daggers. It doesn't affect the other stats.

The passive starts with 16% increased physical damage with daggers. With that value being removed from the passive twice, it ends with 16% reduced, in eachange for gaining the two things that the different transformations transformed it into - increased physical damage with bows, and increased cold damage with daggers.