Might just me, but I prefer "Windows Phone 7.8" vs "Windows Phone 8 Legacy". It's shorter, and when given a short explanation I get what it is. If you call it "Windows Phone 8 Legacy" people are going to wonder why they can't install WP8 apps on it, after all, it has WP8 in the name.
Why are they even bothering with branding "Windows Phone 7.8" ?
They should have just named the update "Windows Phone 8 Legacy" and the actual WP 8, "Windows Phone 8".