I kinda agree with both sides of the table on this one. As a single player, where Link is the only character you use, no. It doesn't make sense that you have to level up your items, when you usually have to use them extensively the second you get them.
It would be cool if you could choose between magic, swordplay, or archery however.

If Zelda ever became a MMO, then leveling would be pretty much mandatory. No-one could be the true link though, so that's why it would work better.

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