I just implemented a version of this (minus the TouchedX and TouchedY stuff, which I worked out for myself) for my quest, that requires you to have the Pegasus Boots and a sword in A and B (or B and A, if you want), and also have an item 'Scroll: Dash Attack' to work. (If A is sword and B is Pegasus Boots and Link has the scroll, or if A is Pegasus Boots and B is sword and Link has the scroll, then DashAttack = true). The weapon's graphic and Damage change depending on which sword you have.
My version cuts grass like a dream, but:
Telling it to UseSprite(0) gave me no weapon at all, so I defined it's ->Tile instead.
In order to keep it from just drawing dozens of swords in a straight line whenever I ran, I put in a ->Deadstate time of 4, which makes the sword vanish after 4 frames (about as long as it takes for Link to rush past it). It doesn't like to cut bushes, though it will on occasion. I'm also having problems with it not damaging enemies, however (probably something on my end, as I am a very novice scripter).
I am very curious as to know if
CODE
ItemSetAt(IS_COMBOS,loc);
actually works, and if so, if the code for it could be shared. This would be of great help.