Here's how I believe the situation is handled: Before the ability on W&T completes, your opponent has a chance to interrupt, so if he interrupts and plays a side battle, you must treat W&T as if it were never played, complete the side battle (with W&T sitting in the main battle in the meantime), and then activate W&T if and when the original hero returns. So any characters targeted by W&T the first time it's played are still in play during the side battle, but are discarded/returned after the side battle.
I'm probably wrong on a couple things here...