When there is a sign in your hot bar, the aiming cursor turns into a box (selected as your active or as a non-active).
If the sign is in your inventory, there is no visual bug.
Whether you are in creative/survival does not seem to change the effect. It seems to be visual only, your cursor is completely functional otherwise.
I am using the faithful texture pack, which was my immediate thoughts. However, why does it show only with a sign in hotbar?
(See attached images)
Environment
From the Minecraft console:
System.getProperty('os.name') == 'Windows 7'
System.getProperty('os.version') == '6.1'
System.getProperty('os.arch') == 'amd64'
System.getProperty('java.version') == '1.7.0_55'
System.getProperty('java.vendor') == 'Oracle Corporation'
System.getProperty('sun.arch.data.model') == '64'
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