It should
not go in any place that already has a detailed backstory in a different game, such as the Imprisoning War or the War of Spirits. They should not have to waste good ideas because they don't fit with established lore, nor should they have to waste time thinking of ideas that
do fit when they should be spending that time perfecting the ideas they
do have, incorporating them seamlessly with the rest of the game. The creation of the Master Sword worked because the tales were very vague, except for the small issue that the Sages supposedly created it. They've already failed twice (OoT and FSA) at retelling the Imprisoning War. It has way too many intricacies that just don't make a good game.
As for where it
should go, I had posted this as a reply to a similar question from the Curiosity Shop:
I think at this point they consider three things when deciding timeline placement:
1. How does the new [gameplay feature or other identifying and driving element] lend itself to a story?
2. How can we connect this story to other stories?
3. How can we open up this time period to more stories?
The first one's very tricky and comes through a creative process. With SS it was easy - Wii MotionPlus = sword = Master Sword = creation of it. Bam, story. With ST and PH, I think it may have been the graphics. Toon graphics work well on small screens, so they re-used the style from WW, so they made sequels to it. Transportation may also have entered into it. For Wii U, this will be the tablet. Think of different uses for the tablet, and then think of how those uses can be brought to the forefront of the story, and you've got this point down.
I don't think they give too much thought to the second one. This is what leads from "WM+ = sword" to "sword = MS = creation", thus placing SS before OoT. However, they dislike relying on backstories of other games. Connections likely won't go much farther than focusing on an important item or concept within the universe.
Third - I could go on and on about how past games have done this. Right now we have a three-pronged timeline. SS just opened up the time period before OoT to any number of legends. It hurt that WW wasn't able to follow up from OoT without pushing LttP out of the way, so they're striving for more ambiguity. Where there used to be restrictions, use a new game to untangle them. This should of course be done with as little retcon as possible, but still without holding sacred past decisions.
So where does that lead us? I don't know. You think about it.
Since I'm now on a forum, I might as well expand on #3.
-AoL made it a series with a timeline on which future games can be placed.
-LttP opened up the series to prequels. The timeline now goes in two directions. Two places to put games (three if one can be squeezed between it and LoZ).
-OoT split the timeline so there are now two futures.
-MM (arguably LA before it) opened up alternate dimensions in which to set games.
-OoX introduced new lands, as did ST.
-SS turned the time period before OoT - which until then was bereft of the Triforce, hidden away in the SR until it was taken in OoT - into a long series of conflicts during which the Triforce was sought after and perhaps used many times, and a villain appears many times.
-The Hyrule Historia opened the "what-if" can of worms.
Virtually every addition to the series has, rather than hindering the creative process with extra lore to which to conform, created new opportunities for expansion of the lore.
So taking #3 into consideration could result in three things:
1. They may simply take advantage of what they've achieved and add a game to any one of the wide-open places, such as at the end of a timeline or in one of the different lands or worlds.
2. Perhaps they'll endeavor to turn a rigid time period into a more ambiguous one, like they did with SS.
3. Something in-between. Take one open piece of the timeline, and make it even more open, like they did with OoT.
Looking back at #1 now, I think this would be a good thing to discuss in this thread. For the Wii U this may be easy to think about (though not easy to come to the same conclusion EAD does), since the tablet will certainly be the new element that they'll be exploiting. I think this will be used for Link's
Magic Satchel, including his items, maps, and various controls. It may also be possible for it to be used as a shield, but a creation story for the Hylian Shield may seem unoriginal directly following the creation story of the Master Sword. Link's satchel is something that has never been addressed, so there's nothing to impede the process of making up a story for it (this is not to say that the story would have to revolve around the satchel). While SS opened up the beginning of the timeline, I don't think that's necessarily a good place to put it. There's still a lot of backstory to deal with there, and the satchel isn't a particularly important item anyway. MC explained the origin of Link's hat even though it takes place after SS. No, I think for the next game they should have the freedom that's available at the end of one of the timelines.
For the 3DS, which is likely to come out first, the only new thing we have is the 3D effect, which we've been told will be important. Well, there's also improved connectivity and an expressed desire to make a new Four Swords game. I can't begin to guess what the 3D effect will mean - maybe others can help on this - but I do think that it'll be a FS game. The whole FSS was shoddily placed in the HH and could use some explaining - both before OoT and after TP. Moving on to #2 now then - how this can tie into other stories - I think there's room for several more FS adventures any time after MC. In fact, the FS backstory vaguely depicts an event after MC involving Vaati kidnapping beautiful maidens before a hero appeared. That's vague enough to be expanded upon. Although, it may be difficult to accomplish goal #3 in that position. If, however, the game were placed between FS and FSA, that would accomplish opening up that section to more stories about Vaati, assuming they don't find it too difficult to work their way around OoT/MM-TP (or the AT if they go that way, which would do even more expanding of Vaati's story on the timeline). After FSA is also an option, since even though Vaati's dead, Ganondorf isn't. But I think between FS and FSA would be more interesting.
So, for Zelda 3DS, my bet is that it'll be a Four Swords game which takes place after FS but before FSA. I think after TP would be the safest place as far as not contradicting other stories. The important 3D effect may introduce some new element that could have some added importance to the series. (My other guess would be that the 3D effect is important because it's underwater, making depth more of an issue, leading to a setting of shortly after WW... but that's stupid.)
As for the Wii U... I can't really get much further than the satchel idea. That's extremely open and could go anywhere. Maybe somewhere in the new "downfall timeline" so it doesn't seem like just a place to throw all the older games to forget about them. If it's something as mundane as a Magic Satchel, I doubt that would end up at the center of whatever story they devise. Very few games did that, anyway. Most add completely new stories.