I am not sure you can even get the quest to upgrade a legendary unless you have a legendary already. That said, it would be nice if they raised the drop rate for those without any legendaries when this went into effect. Making those with bad RNG even further behind those with good RNG just is stupid. It is already bad when someone has their 2 best legendaries equipped at 895, but to then jump them 30 more ilvl? Ouch.
To be fair, this isn't exactly the same situation as ZA/ZG. Those instances were turned into 5 mans that were basically identical to the raid, so having it as a raid and a dungeon would have been pointless. This Kara is only about half the same as the other Kara, while the other half is supposed to be new content entirely. It has a different entrance as well. The ZA/ZG dungeons used the same entrances as the raids, so it sort of made sense that they chose one rather than having both.