http://wii.ign.com/articles/992/992063p1.html
It is rumored that the lady can change into a blade at Link’s will and he can use her in combat.
Miyamoto has only said that the master sword would not be used. Link should still get a sword non the less even if it is not physically seen it could be a spirt sword or something like that.
I am betting on a spirt sword that just appears when Link focuses or the Lady just turns into a sword for Link to use. the whole living sword concept Nintendo wants to use.
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