I decided to make a quick tas to see where frames could be saved, a theoretical best possible time, and see if I could find anything regarding optimization or the birds. Here is what I noticed.

1. The optimal place to grab the black key is actually from the top left corner. This will mean that the key will be towards the bottom left but it is actually possible to readjust with the screen transition. If you place the key on the perfect spot where it will be on the other side before you transition (pixel perfect to my knowledge which means a 3 frame window) and then hold down left, if you time your up left correctly, you can get the key to be directly left of you which you can readjust from there.

2. When going through the bird patterns I found one that I believe to be the fastest. It starts with both the green and the yellow bird popping up in the room before entering the maze. They will both chase you into the maze but, I found that if you are against the wall to the right and time a left press correctly, the bird catching you, actually loses no time at all. In the tas I only got caught by the green bird but I would think the yellow bird would also catch you in most cases. The reason I think this is faster is because when you get to the castle, because the bird appeared earlier and is in the maze, there is no bird in the room with the chalice meaning you don't have to go over anything and you can easily leave the room.

I don't have a video of the tas yet but I did do a frame count so I could get a time for it.
1911 frames / the 59.922751 framerate of the atari 2600 is 31.891 seconds. I'm working on getting a quick video out showing the tas and I will edit this post when I have it uploaded. I hope this will help some people trying to lower their pb's

If anyone wants the input file you can dm me on discord and I will send it.

edit: got the tas uploaded . (sorry for the bad quality but it was the highest quality I could export it in)

I saw your run and I couldn't believe that the techniques I was using on my run were actually the ones needed to get a World Record.

Heck I even had gotten the 2 birds pattern! This is making me want to get that 32!

Just to add onto this. After doing more attempts I started to notice that I lost around .4 seconds whenever I got the 2 bird pattern. After adding a lag counter in bizhawk I saw that having both birds can cause lag making the 2 bird cycle not worth doing in an rta run. This means the optimal cycle is the one after the 2 bird cycle which makes it a lot easier to get.

I'm pretty sure that dropping and picking up items loses a frame each time you do it.

From my time playing the game I've never noticed losing a frame from dropping an item. I'm honestly not sure if you can lose a frame in this game because the character moves in 3 frame movement cycles.