Re: "usable by halfling only" cards
It can carry it, but it cannot use it. Thus, there is no point in giving that card to the Elf Hireling, especially seeing as you could carry that Item yourself instead.
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My unofficial, but comprehensive Flowcharts: Munchkin: A4 Letter; Munchkin Quest: A4 Letter
Rules Checklist for all Munchkin sets: A4 Letter.
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