Was anyone ever, in the history of all mankind, able to get this item? If so: how? I know you have to kill the Krakens in Ness' dream, but there're only 3 and they don't respawn just by you leaving the screen and coming back. Do you have to make the trip all the way back to his "home" and save, reload, and then make your way ALL the way back to the sea, lather, rinse and repeat? Is there a better way? Last time I played through the game, I got EVERYthing, including the Useless Item, and couldn't find a way to get this. I'm looking for an excuse to play through it again.

Yes, but you've got the wrong Kraken.  The Bionic Kraken actually has the Gutsy Bat... he appears just before you face Giygas.  It will still mean beating several dozen of these until one drops the damn thing.

Ah HAH! And so my sixth play-through begins!