dtgreene: (Assuming you're talking about Skyrim, as this mechanic doesn't exist in the rest of the series.)
First of all, reaching level 81 is not a requirement to make a skill legendary; it can be done before then, and the Ebony Warrior speedrun does just that. (More on that particular speedrun category later.)
When you make a skill legendary, it goes down from 100 to 15, *but* you still keep the level XP you gained from leveling the skill. Now that the skill is down to 15, you can level it up again, and gain more level XP, which in turn makes it possible to reach higher levels than you could otherwise. In particular, this allows you to level up past level 81, and keep leveling until integer overflow occurs.
This is also good for gaining extra perks. Not only are you refunded the perks you spent on the skill's perk tree, but those extra levels will earn you more perks. In theory, it is possible to acquire every standard perk this way. (A standard perk is any perk that can be gained by spending a perk point gained through leveling.)
As for that Ebony Warrior speedrun I mentioned? The idea is to kill the Ebony Warrior as fast as possible, but the Ebony Warrior won't appear until you're level 80. So, you need to level up really quickly in order to accomplish this task. Turns out that, once you get the Fortify Restoration trick going, you can level up your Alchemy from 15 to 100 by making a single potion. But that's only one skill, so by itself it will only take you so far. However, if you make it legendary, you can reset it to 15, then level it up to 100 with a single potion, make it legendary again, quickly raise it to 100 again, and repeat, gaining level XP each time. Repeat this, and you'll quickly level up, making it possible to reach the required level 80 fast enough for it to feel like a speedrun. (I seem to remember the time for this category being less than 15 minutes.)
What's the point of levelling up past 81? Do you keep getting option to improve magic/health/stamina with each level past 81?
If you make it legendary, you lose all he bonuses/perks you acquired (for example +X in damage) so why would you be ok with that?
Or when you make it legendary you don't lose all the bonuses/perks you acquired in that tree?
As for this ebony run, thanks but not for me. It feels like abusing the game mechanics. Still thanks for the idea.