I approve of combining the Magic Sword and Red Ring into one item, since it gives Link one fewer item to keep track of and their functions are related, but I think the Magic Sword works better as the combined item. There's already another Ring, so the Sword is more distinctive, and its functions are related to attacking, so it seems more pertinent to Link's weapon than the color of his Tunic. If you're really attached to the Red Ring, you could make it the item that protects against bombs and have the Magic Sword turn his tunic blue. Or you could just leave the Blue Ring. Four Swords Adventures had a Blue Bracelet that halved damage, so only having the Blue Ring makes sense with the series? Sort of? EDIT: Also, it might make a nice visual touch if the Blue Ring gives Link the Magic Shield . . . unless you've got plans for that in a later update.