Link is believed to have took the Master Sword with him to the Child Timeline, but we see it in Wind Waker. I personally don't care for the assumption, but just throwing it out there.
I've seen that theory before, that the power was distrubuted maybe. I've also seen theories that killing Demise in the past happens on some alternate timestream that Link accessed via the Gate of Time. At some point of the game the past is referenced as “The world of the past” suggesting it...