Tor is okay to use and has the same legal status as any other sort of proxy.
Tor can be used as a layer of protection for provide anonymity but there are several things that can screw you out of it. Tor wasn't meant for privacy originally, but as a way to securely relay from an untrusted network to a trusted one.
First is any exploit against the browser. Run the latest stable version with all pugins and extensions disabled as well as disabling javscript.
Second is leaking of information through DNS, flash or other means. Use of privoxy prevents this (and allows you to block ads without a filter on the browser level. Proxying though to tor on a different machine can also help minimize this.
Third is that your browser may leak information through it's user agent string and other behaviors. It may be worth modifying some things to blend in better.
https://panopticlick.eff.org/
Fourth is untrusted exit nodes and watering hole attacks.
Fifth is possible timing attacks or an attacker controlling a large enough number of nodes that they might be able to track all of the hops that are made.
Sixth is you giving away information. (like going to a hidden site and giving them a mailing address)
Really Tor is just as effective as it ever was, it just should be known it's just one layer of protection. If you just want to bypass censorship (what tor is best at) then just running the tor browser bundle is good enough. If you want to start a presidential assassination meet-up group, there are other better-suited systems to do it with like Freenet which operates only within the darknet, serving content from a distributed storage system. If fact with freenet it's possible to create a members-only net where you need the approval of at least three other members before you can join.