There are currently 7 active legacy items in my campaigns. The players love them. I cannot consider WoL a wasted purchase - it's instead one of the best purchases of last year (along with Magic of Incarnum).
The 9th level barbarian in my Age of Worms game slew the Aspect of the Ebon Triad singlehandedly with his masterwork greatsword, and the blood of the aspect etched the blade with odd patterns. Upon the advice of his shaman, he performed a ritual thanking the gods for their aid... and the weapon was blessed. Alden's Greatsword is currently a +1 keen greatsword that bypasses the DR of evil outsiders. Sure, it has a penalty of -1 to hit, -1 to saves and about 8 hit points, but those factors are completely overwhelmed by what it does. (He's spent 2,850 gp on the greatsword - this seems, to me, a bargain).
The 9th level wizard in my Age of Worms game wrested the Staff of Dragon Tears from the leader of some vecna cultists. It has the properties of a rod of lesser enlarge, allows the reading and detection of magic at will, adds 2 to Intelligence, and can cast 3 magic missiles per day (at her caster level). The penalties are a -1 to caster level (which she's negated with Practiced Spellcaster), -1 to skill checks, and -1 to saves, and the loss of a 2nd level slot. This for 2,000 gp.
The 6th-level incarnate in my Ulek campaign discovered the Ring of Memories in a strange demiplane. At present, the ring allows him to use all Knowledge skills untrained, and can give a bonus to them with the investment of essentia. It also permits him to cast cure light wounds three times a day (extremely significant with his soulmelds) and to detect magic at will. He's given up a couple of hit points.
Because I don't tell my players the full abilities of the items, they're always discovering new things about them as they gain levels.
Cheers!