Should I have turned off Legacy FileVault before using FileVault 2 on Lion? I've been happily using Legacy FileVault on my Macbook since I upgraded from Snow Leopard to Lion. Today, I decided to switch to FileVault 2 and went ahead and clicked the "Turn On FileVault" button. Everything progressed as described in the Apple OS X Lion: About FileVault 2 support document.

However, I didn't turn off Legacy FileVault before doing this and was never prompted to do so by the FileVault 2 process. 

Having let the process complete, all seems well. However, Legacy FileVault is still enabled for my home folder as confirmed by the fact that its still turned on in System Preferences ➔ Security and its also still pointing to /Users/.binarybob/binarybob.sparsebundle. I'm assuming there's now a double-encryption in effect for both the entire disk and also my home folder.

So, is it safe to turn off Legacy FileVault now?
You are correct with your assumption that there is a "double-encryption" occurring. This of course has the result of causing a lot of drive thrashing to occur. Having previously had to fix numerous corrupt FileVaults, I would first back up the sparsebundle. Once that is complete, I would then disable Legacy FileVault. 

Ultimately, the only real reason to maintain this setup is if there is reason to suspect there are others who possess login credentials (especially admin credentials) and are capable of mischievous behavior. Even under that scenario, my recommendation would be to encrypt the files which need to be kept secret using TrueCrypt and disable Legacy FileVault.