So, total LI revamp this update. Felt confused the first time? It's probably going to happen again. And there doesn't even seem to be an in-game tutorial, at least not for those who have already gotten LIs!
Fortunately, there are some really good, detailed write-ups for the new system. My favorite is Lotro-Wiki because it includes a chart of when you should reforge your LI as you level up.
But in case that's a bit more detailed than you want right now, here's a quick step-by-step to changing out your old LI for a new one.
1. Appraise all your items and claim the ingredients (you can still use your items, they don't disappear). Note that these are bind to account like old LI ingredients.
2. Barter for new weapon and class item.
-- there are no "ages" to the items anymore, and reforging now "upgrades" your item to a higher default damage/heal rating, and opens up more tracery slots (the Wiki link has a chart to how many slots open at what levels)
3. Reforge at barterer. This will bring your item up to the most recent milestone level you have passed.
4. Drag old LIs out of your weapon slots and place your new ones (for now -- this can be undone later if you don't like your new ones as well as your old ones). You have to remove both old LIs to put in even 1 of the new ones.
5. In the character panel, drag one of your LIs over to the socket slot (flame in it, beneath your shoes) to open the new Legendary Item panel. This will show you which slot uses which kind of tracery (heraldic, power, mastery, & craft)
6. Choose and barter for your new traceries
- note the traceries will bind to character once bartered!
- make sure you get traceries of the correct level (based on character level)!!! They come in 50, 86, 101, 106, 116, 121, and 131 right now
- any tracery can go in any correct slot, there are no more limitations to weapon vs. class item
- some ingredients allow you to buy stronger traceries (uncommon vs. rare for example) and you may or may not have enough to get all of your traceries at a higher rarity, so take your time to do the math, and if necessary, choose which ones you definitely want at legendary or incomparable and which you're OK using rare or uncommon.
7. In the new LI panel, drag the tracery you want to put on your item into the correct slot. Be careful, as you can overwrite old traceries!
8. Add enhancements to traceries by dragging your enhancement to the tracery you want to add it to and choosing how many to use.
- use first any enhancements with a lower limit (in green on the tooltip)
- from what I've seen so far, they don't strengthen the skill effects of a tracery, but rather the stats each tracery adds to your character (will, crit, outgoing healing, mastery, etc.)
Hope that helps!