Special thanks to lordpsi99 for mentioning the important detail without even knowning it. Saving on epona. If it wasnt for that detail, we probably wouldn't have found this in a long time.
Now that we know exactly how to do it, and I discovered that it was possible with Bottle on B, I thought it would be a good idea to create a new thread for it.
To start with an item on B you have to do the following:
Method 1 (Horse) Found by CloudMax
1. Mount onto a horse (working when you pay to ride at Ingo aswell)
2. Exit Game (Saving is not required, but may be used)
3. Create a new File
Method 2 (Rod) Found by CloudMax
1. Pay to fish at fishing pond
2. Exit game (you may save if you want)
3. Create a new File
The new file will have the item you had on B when you start it.
This method works with Bottle on B, making RBA possible as young link, it did however not work with Deku Stick on B.
Video of me starting with bottle on B
http://www.youtube.com/watch?v=xOsAAxglBRUWhen you reach the "Continue Playing?" screen the B button resets.
So if you die or save the game, the B button will reset.
Things to discuss:
Would this be allowed in speedrunning? If so, would it be a separate category? (Newgame Plus), allowing you to start with any item on B?
I personally support having a Newgame Plus category.
It could bring out some awesome things.
And god, I wanna BA hoverboots/hookshot to B right now and try it as young link!