While it seems to work properly to cast Bestow Curse upon an item, the very act itself makes the spell useless. What I mean is, when a priest curses an item he intends to give to someone else, and thereby curse -them- the item can no longer be transferred, so it's only good for cursing the curser, apparently.

Does this happen even when you're not wearing the item that you're cursing?

That's the only way I even tried it. I was -not- wearing the item at the time.

Should be fixed in v798.