There are many solutions on Nexus to fix the awful choice of having you auto equip the worst arrows available. But all I've come across have major problems. Some don't work at all, some don't work with crossbows, some can't deal with modded arrows, lack features I want and so on. I've set out to make one that satisfies my own needs and here it is.
IMPORTANT NOTE: For those updating from 0.1.0 to 0.2.0, the scripts are now contained in a BSA so you have to make sure that the previous version is properly uninstalled (you don't need a clean save though). For MO2 that means chosing "replace" when asked to merge or replace the mod and for anyone else that means double checking that LAutoEquipAmmoEffect.pex and LAutoEquipAmmoQuest.pex are no longer inside data/scripts. If you do not uninstall these files, they will overwrite the version contained in the BSA and the mod will probably not work at all, best case it will continue working as it did before.

Note: This mod is considered beta quality. It has not yet been extensively tested and may have unforseen sideeffects. For what its worth, I am currently using it in my 300+ mods 50 hour long save with full confidence, keep this in mind and give me all the feedback you have.

Note: If you are just looking for a mod that changes the vanilla logic of equipping the worst arrows to equipping the best arrows, you may want to look at other, more lightweight mods first.

Features
This mod will give you more influence on which type of ammo will be equpped when you run out or equip a ranged weapon. By default, the game will always equip the weakes ammo in your inventory. This mod will instead equip the best.

The one feature that seperates this mod the most from similar mods is that it supports both Bows and Crossbows and will work with all mod added ammo such the arrows added by Immersive Weapons or the various special Arrows and Bolts from Ordinator or Legendary Skyrim Crossbows without requiring a patch or any special actions by neither the user nor me. Should you ever happen upon a mod that doesn't work with this, please let me know so that I can mention it here.

an MCM menu allows to customize various features such a disabling/enabling the mod via hotkey, allowing/disallowing changes on weapon equip or while in combat.

The ESP is ESL flagged and will not count toward your plugin limit.

Quirks
This mod uses Papyrus scripts and a custom Magic effect to do it's job. As such you will notice some quirks. The most noticeable is probably that you will see skyrim automatically equip Iron Arrows/cheap ammo when you run out or equip your bow before they are replaced with better arrows shortly after. This is because my mod does not overwrite the default behaviour but rather works in addition to it.

Normally this won't be of much concern but in load orders with heavy script load it can take up to a few seconds until the ammo is switched. Eventually I hope to somewhat fix this by moving as much functionality as I can into a DLL plugin, however this is not a priority right now.

Installation + Load Order
Simply drop the contents of the archive into the data folder or install with your favourite mod manager.

Since I didn't touch any vanilla record or assets at all this should in theory be compatible with literally everything. Why only theoretical? Well it will of course conflict with mods that do similar things, specifically mods that equip or uneqip Arrows or Bolts.

Uninstallation
This mod uses scripts and quests and is therfore not safe to uninstall mid-game.

If you insist on doing so anyway, clean your save with FallrimTools or similar utilities.

Planned Features

- MCM
    - Enable/Disable
    - Exclude Arrows/Bolts
    - make the magic effect not appear in the effects list
- Configurable hotkeys for enabling, disabling
- Perhaps have it switch when you pick up better arrows too
- Ammo cycling per hotkey
- Optimisation and Refinement
- Eventually move stuff to a DLL plugin to speed things up (once I learn how to do those)

If you have any more suggestions, let me know and I'll see what I can do

Changelog

+ 0.1.0
+ First Release
+ 0.2.0
+ Ammo change logic rewritten. Now uses a list of known ammo instead of searching the player inventory every time. 
+ Previously unknown ammo will be registered when picked up. 
+ MCM menu added
+ General page
+ Toggle the mod on or off
       + Restrict ammo switching to out of combat
+ Prevent ammo switching on weapon equip
+ Toggle all hotkeys on/off
+ Set On/Off toggle hotkey
+ Reset and update option. Resets the mod to default and forces and update check
+ Uninstall option. Stops all quests and removes the magic effect so the mod can be safely removed.
+ Some Debug information (If you encounter issues, it would be a good idea to include this in your bug report)
+ Registered Ammo Page
+ Scan inventory option. Forces the script to search the players inventory for ammo.
+ List of known Arrows and bolts, sorted by damage.
+ Added infrastructure to detect and deal with version changes. Should make future updates a little smoother.
+ Mod now comes with BSA.


Authors Note
Despite the similarity in name and function, this mod is not related to Auto-Equip Best Arrows. It was created entirely from scratch.

I do not intend to ever make mods for Oldrim or Console versions, however if someone is willing to port my mods I will give my permission. The only requirements are that I am credited and that I am notified, so I can add a link here.