While playing Isle of the Winds, I found the Magic Boomerang in Level 2. I had the normal Boomerang equipped in the B button slot. When I picked up the Magic Boomerang, the B button slot went to the Bombs, which is the next item to the right. A quick press of the L button got the Magic Boomerang up front.
The desired affect is for the Magic Boomerang to replace the Boomerang in the B button slot.
This is a minor bug, for while it only affects game play for a second, it is not a bug that prevents completion of the game.
Note: I believe this bug is replica-table in the First Quest. The only difference would be that you do not hold the Magic Boomerang in the air upon grabbing it.