So I found a squid hat at the dollar store and obviously since my horse is nicknamed Squid I had to buy it. Thankfully he thrives off of any sort of attention.
So I just learned that the way Ultima Online was originally programmed, a player was a “container” housing their inventory, the inventory was coded as a “map,” and horses, when first introduced, were coded as an invisible inventory item (pants) until called and mounted.
But for the first 24 hours or so, someone had forgotten to code it so they reverted to an item when put away.
So while this wasn’t actually visible, the horses wound up behaving in the inventory map as they would when released into the wild.
Which means that the horses were wandering freely inside of the player characters, picking up some of their items, eating the ones that qualified as food items, and since there had never before been a need to give the inventory map any boundaries, the horse pants and their stolen items would eventually wander off into oblivion.