This is a taunt, and can be very dangerous if used with [Misdirection]. It forces the target to attack the hunter, causing the mob to ignore its threat list rather than generating high threat. The taunt cannot be Misdirected.
Hostile players are Immune to this spell, as with any other threat modifying ability.
This spell is Arcane-based and as such all arcane-immune mobs will be immune to it.
Pulling a mob away from a group to crowd control it with Freezing Trap can be tricky, because if you generate too much threat, it will be difficult for the tank to pick it up later. With Distracting Shot, you can taunt the mob towards you without fear of this problem. When the trap wears off, you can either let it run back to the tank, or use another Distracting Shot just before the trap wears off so you can trap it again.
This shot can also be handy for rescuing a healer, by diverting an attacker towards the sturdier hunter. Similarly, when soloing, if your pet is getting low on health, you can taunt them towards you momentarily before casting [Mend Pet], to ensure the spell has time to work before your pet dies.
Patch 4.1.0 (26-Apr-2011): Distracting Shot and Multi-Shot are now properly 40-yard range.
/Patch 3.0.2 (14-Oct-2008): This shot now "taunts" the target onto the Hunter. The taunt effect will last 6 seconds. Distracting Shot now only has one rank (rank 1). Does not affect misdirection anymore.
Patch 1.7.0 (13-Sep-2005): The tooltips for quick Hunter shots have been updated to show them as instant abilities.
Patch 1.5.0 (2005-06-07): Special ability shots no longer add the ranged weapon speed or take into account ranged weapon haste when determining the actual cooldown. The tooltip and cooldown timers should now properly reflect the actual cooldown.