After going back over the rule book, it does seem that the 'Everyone dies' answer is right. I was on the verge of being outraged that the legend rule would actually still let you make use of the abilities (albeit briefly) and then remembered that just how few such Legends there are with static -x/-x effects and calmed down a bit.
I was also fairly sure that the Legend rule worked such that they are never both actually in play at the same time, but it seems that I am wrong. Again, so few Legends around with that kind of ability (and honestly this kind of play is a bad play anyway) that its just never come up. I have played a Kokousho to kill my Kokusho post-combat for a ridiculous life swing, but thats as close as its ever gotten.
Always nice to be asked questions that make you learn the rules better. I bet if you tried this play at a tournament you'd have to get a judge to make most opponents believe that you kill their dudes as well as both of yours.