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I have an inventory item (a hook) that's used on another inventory item (a rope), how do I let players do it both ways around? (Use hook on rope, OR rope on hook)

The engine actually tries both ways around. If one does nothing, it tries the other. But for this to work, you need to check against the 'item' variable that's passed to the function, rather than checking against the active inventory item.  

Eg: If this is in the Rope's 'Inv' function it will work both ways.

if ( item == I.Hook )
{
    Display: You combine the hook with the rope to make a grappling hook.
    I.GrapplingHook.Add();    
    thisItem.Remove(); // In this case, the 'thisItem' variable is the Rope
    item.Remove(); // In this case, the 'item' variable is the Hook
}