Not sure my one experience is definitive, but: I just used the OI exploit to get to lvl 81 (I have grown tired of grinding beyond level 50 for no real purpose) and fast traveled to the Lady Stone. I got a Legendary. He dropped a Daedric Helmet of extreme alteration and a Daedric war axe, as well as the usual bones, scales, and gold. Not sure it matters, though. By that time you should pretty much have your end game gear in place, nor have any further need of money.
Aww that svcks, i was hoping for some cool new stuff.

Interestingly, even though I am now at level 81, the twin dragons in the forgotten vale were still only Revered, not Legendary. It was a beautiful looking fight as they kept zooming by at low level and shouting at me. One of the prettiest fights I've had.
Yes!
I loved that encounter, it was the best moment in this dlc.
That Drain Vitality shout can be quite powerful. It may have a blast radius effect since I have seen it vary in intensity. I just ran into a Legendary at Winterhold and it dropped my health something fierce. That was with over 600 health and 85% magic resist. I had to pop a potion. And it totally anihilated my magicka and stamina. Other times, however, it has not had such a powerful effect. I think the closer you are to the dragon's aim point the more powerful it is. (side note: I am playing on master difficulty, so it is probably twice as effective, but still, it can be a powerful shout.)
I got my butt kicked by the 2 Revered Dragons in the Forgotten Vale because of that shout.
Now I finally have a use for those Ward spells, to block that shout.