1. Weild isn't the same thing as move. He could technically take Ganon's corpse and dump it into Death mountain, sword and all. Even if he couldn't do that, once the sword is shieved, anyone can touch the shief.
2. I could care less about obeying any convention of the timeline, as you can tell. It doesn't make sense according to any timeline theory. But I don't really care, and in true Zelda fasion, I would decide it's exact timeline location - after TP or after WW - some time very late into game developement. Either way, we don't know if the entire Zora race evolved into Rito, or if it was a divergent evolution. Are there still Zora in the WW timeline? I haven't played Phantom Hourglass, so I'm not sure.
I think you're looking for "sheath", not "shief" as that is not a word.
Your story was pretty accurate. In relativity to the timeline, I feel that this Legend of Zelda could easily take place after Spirit Tracks (not just for obvious reasons involving trains, and that is, if ST takes place after AoL -- I never noticed that American Online shares the same acronym). Furthermore, the Zant featured in this game is the one in the WW timeline, rather than the one confronted in the TP timeline. Inversely, perhaps he actually took the throne legitimately, rather than Midna, and furthermore, has incredible powers. I think he would definitely need to be designed differently than seen in TP so as to not confuse the two, but this could all work out. I'm keen on the idea of a Ganon reincarnate, as I expressed the same idea in my "Project: Future Zelda", which coincidentally shares similar traits with your story.
Now, for
c3gill. Being a Termina fan, this was a great read. In terms of D&D alignment, if Fierce Deity is evil too, then he would be Lawful Evil, while Majora would be Chaotic Evil, and while both are evil, they are opposites. Anyways, I take it your "indians" are merely native people who resemble the tribal, early-indigenous look you were imagining? I think this game should take place not just in Termina, but in lands to the East of it, past the Ikana Canyon. These people should be native to the Ikana Canyon and would later on build the Stone Tower Temple.
I believe that while some of the Sheikah were those that the Fused Shadow was made from, those that abused Majora's Mask's power for hexes should be members of this native tribe, and hence, this tribe is the Terminian equivalent of the Sheikah.