We think the item can be brought in and be found along with her clothes as suggested, and it may not need much nerfing. That said, if you think it would be more interesting if it started at a more "base" level and needed some time or some means to increase its powers again, that can be done as well! As to the how, there could be a number of different methods such as just a general "as time goes on and Zelda adjusts to the world" to absorbing magic from other relics or elemental crystals.