By placing multiple objects in a container, and then emptying the container one item at a time by removing it's contents, you can hold several objects in each hand at once.
For instance:
The player can hold one water skin in each hand. However, if the player takes 3 water skins and stuffs them into a 4th, the player can remove the 3 water skins at a time and end up holding 2 in each hand.
Very likely, the player can hold several weapons in this manner, being able to attack for massive damage (three masterpeice weapons? in one hand?! made of adamantium!? rofl.)
A picture of the bug:
(http://img120.imageshack.us/img120/994/multigraspbughe0.png)
[ December 02, 2006: Message edited by: Mechanoid ]
That is, although literally it might be quite possible to hold several small items in a hand, isn't the meaning of having an item in hand in the game, that that is the item selected for use?
Even if you only attack with one weapon at a time, having several in hand might make it so you only lose one weapon when you drop it or it gets stuck in a target.
What happens if you hold four shields at once?
In any event, it seems like a bug.