I actually didn't think this was a bug. I thought you just didn't think too much about how these things interact with each other, so an oversight in designing rather than a software bug. Looking at what Snoopah said below you did think about this and that's great!

So I think I got confused because normal drops and things like shiny objects and exit keys are handled differently. Psychic can pick up the former (I didn't know it was psychic, I thought it was just how "can't touch that" works with bound hands in general until I saw Snoopah's reply) but not the latter.

Also, since we're already having this conversation, I want to also report 2 things about the spell "Kinetic Slash":

1. It seems that, when the player character's hands are bound, it cannot target  helpless enemy. On the occations where an enemy is helpless but still has hp, it seems that we can't use "Kinetic Slash" to "finish them off". I think this is a programming bug.

2. "Kinetic Slash" requires the player character to see the enemy to target them (I found this out playing with "Directional Vision"), this makes a blindfold very punishing on a player relying on it (or maybe it's because I had that perk that makes a player wearing a blindfold only able to see the enemy next to her. Not sure how far a blindfolded player can see without this perk). However, I think this can be changed. On the in-story side, a advanturer with telekinesis abilities can certainly slash with their weapons to somewhere they can't see. On the gameplay side, this better enables a playstyle of wearing arm binding and blindfolds and still progress through usage of telekinesis and arcane knowledge.

Cant touch that perk still lets you pick up items, if you are kneeling with mouth open.

I actually didn't know that!

Psychic perk actually also does allow bypassing it partially by letting you pick 1 item per interact while shuffling the rest.

Oh so this is the effect of psychic? I thought it's just how "can't touch that" works in general, that it has different levels of impeding one from picking up things. For normal drops it works in this way, and one just cannot pick up exit keys or shiny objects.