I've run into a bit of a problem. I cannot separate the background and the walls/floor of the second palace.
This means that Link must exist either in front of both the background and the ground he stands on, or behind both. Neither is pleasing.
I wish I had screen shots to demonstrate the problem, but I (stupidly) forgot to take them and I'm not ready to spend ~2 hours to get back to that point (for now, at least).
Look at this picture from the original. Now imagine that the background was (instead of bricks) a bunch of chains whose width scales the entire z-axis (from behind the red blocks to in front of Link).
Is this a bug with 3DNes or some unfortunate effect of the way Zelda II was programmed?