The currency used to conduct a consensual transaction between two parties is not the issue.  This can be done in Euros, Francs, USD, CAD, etc.  Whether the government considers the transaction to be legal is another story, but as long as all parties involved in the transaction are pleased, what's the real problem?  It's just job of government to ensure rights are upheld equally, meaning if one of the stakeholders in the transaction was wronged, he/she could use the legal system to make things right. 

There are grey areas like prostitution, but that's largely caused by its association with the black market.  Since prostitutes can't use police protection, just like drug dealers can't, they have to use pimps and thugs which come with their own problems. 

Bitcoin should stay legal until cash is made illegal.  US dollars are traded on the black market all the time, and no one seems to care about that.