I've noticed that passes get batted down at the line of scrimmage a bunch and I know in a real game you will have that - not as often as it seems to happen here but at least it makes some sense. However I have seen that passes that should be at or near the top of their arc are also batted if the defender is in line of the path/pass.

This play and the one immediately after seem to illustrate:
http://fakepigskin.myfootballnow.com/watch/932#161975

Just wondering if the ball is a frozen rope that leads to batted ***** that should be too far above the player to be knocked down. I realize that I can't really know for sure if the ball was thrown short or something like that, but this isn't the first I've seen it. Just thought it does not look right but I'm not sure enough that I'd call it a "bug".

The altitude is tracked for the ball and cannot be knocked down if it is out of reach - so yes, there is an arc. The QB will normally see the defenders in the path of the throw and adjust the velocity of the pass to arc over them, but depending on his experience/field of view he may not see the defender in the path. In your example it is most likely that he didn't seed the defender, or felt that he had a better chance at zipping the ball past him than he would have had at making the pass complete with more of an arc given the traffic he was throwing into.