Skull Woods doesn’t have a key item. Instead, it doubles down on its signature gimmick: Wall Masters stalk Link throughout the dungeon. If Link merges with a wall while the Wall Master is hovering overhead, the Wall Master immediately comes down, giving Link a chance to get the drop on it. Link can kill one to buy a little bit of time before the next one respawns. On the other hand, the Wall Masters can be useful for puzzles – Link can manipulate them into landing on switches to activate them, or enemies to do damage. Instead of a miniboss fight, there are five enemies in a room – two on platforms Link can’t reach, so the idea is for Link to use the Wall Master to kill them, although if he’s got bombs he can toss them up there to do damage. Other elements are also borrowed from A Link to the Past’s version of the dungeon – fully exploring the dungeon requires going out and coming back through different entrances, and Gibdos appear throughout the dungeon (like the ones in The Minish Cap, they turn into Stalfos if they take fire damage).
The dungeon boss is Knuckle Master, an armored Wall Master with an eye on its palm. It has two attacks – a slam attack like so many other Wall Masters that destroys damaged floor tiles, making further attacks harder to dodge, and it curls into a fist and charges. The latter attack is the key to beating it; Link can lure it into punching the wall, which stuns it so it lies palm-up and Link can attack the eye. Ceres is the Sage Link rescues – her painting is outside the dungeon and can be seen before Link enters the dungeon if one looks for it. She remembers Link from Sanctuary, and notes that he’s gotten stronger since then.
In the dungeon, Link found a second piece of Master Ore, and it takes two for the (Hyrulean) Blacksmith to be able to upgrade the Master Sword to the – well, it’s red, like the Tempered Sword, but just called the Lv. 2 Master Sword. Unlike in A Link to the Past, the sword beams it shoots are more powerful than the base sword’s. If Link swings this sword where the Lorulean Blacksmith can see, he’s impressed with the craftsmanship and offers to improve it further if Link comes across more Ore. (There's a third piece in the next dungeon, but he needs two.)
In the village, there’s gossip about the gang of thieves headquartered in the dungeon. The boss got a valuable new painting, and one of the members of the gang knows where it is, so the boss locked her up. If Link tries to go to the hideout, he’s challenged to complete three verses about the thieves. If he can’t, he’s told to get lost; fortunately, there are people all around town indiscriminately singing the songs, so Link can pick up the verses from them. (There’s also a small cult that worships monsters rather than become thieves.) With the song, Link gains access to the dungeon (no key item here, either). The lookout leaves Link free to explore. The boss room is immediately to the right, and a floor or two below, the Thief Girl can be seen locked in her cell.
The dungeon is mostly a straight dungeon crawl, and Link gets the key to Thief Girl’s cell after a miniboss fight against Eyegores. Thief Girl says the same thing Blind did in A Link to the Past when Link rescued him, “Ohh, thank you very much. You saved my life. Please take me outside.” From here, Link has to lead her out of the dungeon, and if an enemy touches her, she’s dragged back to her cell. On the upside, many of the puzzles leading out require two people to solve, so Thief Girl has to help; it’s kind of like escorting Zelda around in Spirit Tracks.
As they reach the entrance room, however, the exit is closed, so they have to try the boss room. As soon as Link enters, he’s cut off from both the other exit and Thief Girl, leading to a boss fight with Stalblind. Stalblind is a giant skeletal warrior with a sword and shield; the shield’s so big Link can merge with it, confusing Stalblind, and allowing a free shot or two. After a while, Stalblind realizes the shield is more trouble than good and tosses it away; after that, the strategy is to attack when he misses with his sword. Stalblind later detaches his head to fly around shooting darkness at Link, but the strategy remains the same. Once Stalblind’s gone, Link and Thief Girl are free to leave. She leads him to the painting of Osfala (and the heart container). With everything that’s happened, Osfala realizes he’s not the Hero but a Sage and gives Link the Sand Rod.
With four Sages rescued, there’s another cutscene with Hilda and Zelda. “Can you begin to comprehend how lucky you are? Such legends! Such heroes! We had legends. We had heroes. Lorule had hope. But all that is gone. Lorule has only me now. And YOUR hero, of course. And if the Hero of Hyrule fails me…? Oh, but I must have courage! He will succeed, or all is lost.” Hrm. If Ravio hadn’t given Link the bracelet, Link would still be a painting on the wall of the Eastern Palace. Is he part of Hilda’s plan? I suppose, if he’s who I think he is, it shouldn’t surprise me he’s mixed up with Hilda…
Oh, and speaking of Ravio, his bird comes to collect the Sand Rod, so Link needs to go visit him to acquire it for his own. He can buy it outright – no need to rent it first.
Next: Heavy lifting.