Ian Sane: I agree with you. The sword mechanic was the most interesting and failed mechanic of Zelda 2. I liked the idea of having to fight, and be concerned about positioning and attacks from both sides and being able to duck and such added depth to the combat, but then the sword was so short it made the game unplayable.
This is why I think a sequel or remake is justifiable. I would love to see Dungeons take on a bigger size, like exploring mini worlds of Super Metriod, with the same environmental storytelling that made Super Metriod so great. It could also be used to help give clues for puzzles and traps.
I also think focusing the game on combat learning new sword combos, item combos and such can be fun. Allow Link to have his sword and 2 items available (one can be the shield, but you can choose not to use it, for more offensive power. Then item combos and chains in combat can be made.
This new mechanic could be used to allow for stronger enemies and mini bosses that require not just items to defeat, but knowing how to use combos against them.