Is it secure to use ciphertext feedback with RC4?
At least one thing goes very wrong: if an adversary can obtain the ciphertext for a few short chosen plaintexts and the same reused key/initial state, that allows reconstructing the state because the indexes vary in a controlled way. That certainly works if we obtain the ciphertext for the $2^{24}$ plaintexts consisting of the 3 bytes $u$ $v$ $w$ $0$ (basically, we can make some hyptohesis on a few state bytes, and confirm or rule it out based on the ciphertext for that chosen plaintext); or something on that tune. Likely, it is possible to mount an attack requiring much less chosen plaintext.

It might even be possible to mount an iteratively chosen plaintext attack working without key reuse.