A topic from AEG's L5R CCG Rules forum, copied for Oracle of the Void from a copy of the forum saved in October 2015, so pages it didn't save are missing. Players' names are left out; the rules officials are named. Rulings are as they stood on these dates; later rulings, the rulebooks and the Rules Archive may differ.
Reaction: After the resolution of another player's action that destroyed this card or its Personality: Attach this card to your target Personality.
Since the Reaction occurs immediately after the destruction, does it occur from the discard pile, thus incurring a Gold cost to bring it back into play, or does it transfer for free the moment before being placed into the discard pile?
Since the Reaction occurs immediately after the destruction, does it occur from the discard pile, thus incurring a Gold cost to bring it back into play, or does it transfer for free the moment before being placed into the discard pile?
The former.
Firstly, you are incorrect about the timing. The Reaction occurs after the resolution of the action that destroyed the Personality or Blade, not the destruction itself. Secondly, there is no transitory place between play and the discard for destroyed items. Thus, it is definitely in the discard pile, so its Reaction does bring it in to play, and you will have to pay its cost.