Zaedar's Rule #1 - Friendly Fire ISN'T
This game is deep and extremely well made, it's quite easy to blow off your own foot and this is just one way to do it.
In my opinion the Company Captian's Cap is not bugged. The description clearly states: 'Grants Confuse when hit by a Critical Hit' ... so, if you crit the character wearing the cap you may be confused (double entendre intended).
The above may work to your advantage or disadvantage (as with many, many actions or choices you make). As an example of an advantage: Let's say that your main tank is Eder and he has donned the cap but is in the process of leveling the confused proc. You really want to level the cap (because confuse is a very very powerful spell).. so as soon as Eder has engaged Grieving Mother casts Soul Shock on Eder an crits. Tada! One more step closer to leveling the cap (as Grieving Mother is confused). I must say that the above Shod in Faith example would be a much better way.
As an example of a disadvantage: Eder again but this time it's mid battle and he has been taking some hits (but no crits).. Durance crits Eder with a heal and proceeds to wander over and starts smiting Aloth.
I look at it this way - some of the most powerful magic items have always been cursed.