This idea, I like, but only in some cases. It would be a really awesome addition, but only if limited. Combining every item in a game with another item wouldn't work. Like, how would the Ball and Chain combine with an Empty Bottle? Would Link swing around a bottle instead?
Of course, that is a very poor example, as obviously, the bottle wouldn't be used in this case, but it's what I'm trying to say nonetheless. Combining items with equipment wouldn't work either, unless something like the Iron Boots were there, then that's understandable.
This idea would be awesome if it was used with only specific items combining with other specific items, otherwise the idea would be abused and stupid. One thing that would be awesome. Combining the Lantern with the Arrows would make sense, as the result would be Fire Arrows. Combining the Bombs with the Ball and Chain ... well that would sort of work, but would be pretty useless. Swinging around a Bomb on a chain would be interesting, however, it exploding upon contact with something would make it useless. A really cool example would be combining Deku Sticks with the Lantern (Yes, I am aware that it was not in Ocarina of Time) It was sort of used, when you lit it with a torch, but if you had the ability to do that anywhere, plus it would have increased attack power, however, that would ruin a big portion of the puzzle element ... so bad idea.
Overall, it's an awesome idea, but I can't think of that many examples ...