Just out of curiosity, what is your algorithm method for getting the item's scale and position:
When you scale it, do you practically scale all three four dimensions, and along with that does the hand configure the pitch/yaw at the moment, or did you just hook it in directly setting the item's pitch/yaw?
I wish I could scale things in 4D... I could be done with the game by now.
I take the 3D volume and the 2D area... then I scale up the 2D area so that the flat 1 block volume is the same (so sqrt(depth), basically).
The model has an articulated skeleton and bones, etc... I just grab an attachment point on the hand and monkey with some of the bone settings so that the hand is in the proper position. So the wand/knife/whatever automatically moves when the rest of the skeleton does.