Whether it is or not I'm not particularly sure...
...however, banning specific items on specific maps is really silly. It's not our job to stop people from using it - it's those who change maps to fit MCSG who are meant to fix these problems.
If it isn't allowed, then I wish the staff good luck at telling the entirety of the in game community who doesn't read the forums that this is the case and having them all follow it, it's hard enough with block glitching. I don't even have to look at the rules to know that there isn't a written rule against it. It'd be far easier to just go into the map, find the dispenser or whatever it's in, and remove it...that'd take less time than a couple occasions someone complains about someone having it to the staff.
For clan battles organized by the staff? Sure, I can understand it a little I guess...but honestly? If I got the "Master Sword" in demons breeze by killing it's user in a regular game, I should have the right to use it. More than 90% of the playerbase wouldn't know any better. Simply making a rule that "no map specific items are allowed to be used" would be very hard for the majority of players to understand. How are they supposed to know what is and what isn't a map specific item? If I were new to the servers and got the master sword for killing someone on demons breeze, I wouldn't have a second thought about using it.
If it's not allowed, it should either be removed or it should become allowed. There is no way to know what method the person obtained it by. Even if it was only possible to get through block glitching or something of the sort...who's to say the current owner didn't kill someone for it and didn't know better?
This is all assuming it's disallowed in regular play. Disregard otherwise. In any case, I'd hope it's allowed because of the reasons stated above.