I think there's some confusion here. The girl in that picture is the opponent. If your character (and his respective bounding box) is in the green when she triggers this attack, you take some damage. If your character is in the red, you take more damage, and probably get aerialed. Green is some effect, red is full effect.

The thing is, this doesn't really relate to Hanzo's arrows. It seems his arrows have a narrow physics collision area, and a wide damage-dealing area. It's not a hitbox and hurtbox, more like a narrow collisionbox and a wide hitbox, if you'll allow me to make up another word.

If they're going to collide with environment, they should collide across their entire hitbox. Of course you'll get floating arrows in the edges of obstacles, but I think that's better than letting the arrow bypass the obstacle and sweep its log-sized area across someone behind it. Maybe the arrows need to be as large as their hitbox, either physically or with a cone of red/blue "force" surrounding the projectile.