It isn't a bug:That seems like a bug. I've never heard of it healing 100%.
Sand would only be slightly more efficient in not having to waste a turn as often. Still not good.
Rain probably wouldn't do much. You'd just see more teams with Water-resists maybe.
Sun would definitely have a big impact. Moltres sun-boosted Fire Blast would be broken. I think Snorlax can be 2HKO'd by a roll with spikes, and I'm pretty sure Raikou is outright 2HKO'd. Tbolt might be used more frequently because of this, and teams relying on Thunder might choose to run Sand and Rain if only to make their accuracy not completely fucked.
While Sunny Day is in effect, the base power of Fire-type moves will be increased by 50%, and the base power of Water-type moves will be decreased by 50%. In addition to this, the moves Synthesis, Morning Sun, and Moonlight will recover twice as much HP as under clear conditions, and SolarBeam will not require a turn to charge. The accuracy of Thunder is also lowered to 50%.