It is not without some serious flaws. I updated the OP with my new findings. 

I don't see a way to do this without applying the penalty all the time, which would seriously nerf ranged weapons, but I'm not nearly as well versed in the code as Heavenfall or SeanW3 are. Even if it is possible, the AI would still need to be taught how to deal with it, which is the reason why the original idea doesn't work.

should double strike still be range restricted though?

they changed it because the ai was having trouble using them properly with limited range.

Units throwing knives are primarily melee units, so they'll anyway rush forward to attack you in close combat. Doing so they get into range for throwing knives.

To introduce range penalties is fine, but longbows used to have range of 200 yards, a bow that could not shoot at the 50 or so steps wide battleground that are used in the game would be a pitiful toy indeed.

Yep, I would love to see range penalties or limits imposed for this very reason.

I do not think that we need range limits on bows.  We already have units that can cross most battlefields in one turn.  It would be ridiculous to have bows that can be charged from outside their range.

That said, we need a mechanism that hinders bows picking off the weakest units at their leasure.

While many TBS games have had great mechanics: cover, obstruction from units in front, shield units helping those besides them, unless the AI can be taught to understand those mechanics, there's no point in introducing them.

In a few words, unless Stardock accepts that this is a problem and does something about it, there will be no real progress.

The word short bow is not an universally accepted term.  I mean, it is universally used, but not everyone means the same by it.  Many archers and more and more researchers use "short bow" to refer simply to a bow that is shorter than a particular length. A composite short bow is a superior weapon to most (some including myself think any) longbows, and should by no means have a shorter range.

But even an crappy self bow can fire a couple of arrows while a charging horse crosses its range.  And it's very unlikely that a dedicated military unit would be armed with a crappy self bow. English peasant rebels, Mongol tribesmen, Turkic nomads... all those had pretty damn good bows.  The hunting self bow was an often illegal weapon that had to be cheap and painlessly discarded.  I can imagine it on a Fallen Enchantress battlefield only as a early bow that requires no research whatsoever.  You know who would have self bows? Militia in a level 1 city.

Is it possible to keep the range unlimited and simply implement ranged based accuracy penalties instead?

The problem with the terms short bow and longbows you are correct in that the former is not well defined except to possibly identify a horse bow which was by necessity shorter as riding a horse did not allow the length of normal bow.  You are correct also about about he Mongols having very good bows, which if I remember without looking up they used a short recurve style bow which would is more powerful in terms of distance and damage than a standard shorter bow.  I used to do quite a bit of archery and researched some of this when I was younger but as with all data history is always evolving with new data being added or other data being proven wrong.  

A short bow could possibly shoot all the way across a field but would its arrow penetrate or would it just land and bounce by the time it got there.  I understand trajectory arcs and speed from gravemetric pull.  Basically a shorter bow would not get the arrow up high enough that when it landed on the other end at an arcing angle that it would penetrate all but the lightest armors.  That and a short bow can not shoot as long or heavy of arrows which would not have the mass to penetrate at the speed they are going when they land.  The longbow and the English longbow could put an arrow at an extreme altitude for a bow such that at its optimal height that it could land and still penetrate heavy armors at long distance, this is also because of the larger and heavier arrows used.  These bows were eventually replaced with crossbows because of the extreme penetration capabilities of crossbows and the ability to train troops to use them faster than longbows which required a lifetime to master.  

So in answer to your post I would say that we need a range limit for bows and a accuracy penalty for different distances compared to that range.  Half distance would be no penalty and anything beyond half to 75% max would be at a -10 accuracy and max range would be a -20 accuracy.  This is most likely impossible with the way the game works currently but it could be added.  This way also you could have a short bow still be able to shoot across a field but it might not do as well because it most likely not going to hit.

yeah, and they had an odd shape for a bow too. (lower grip)