You have failed to demonstrate how dozens of people working hard at perfecting their craft all being accorded the same social status is a bad thing that automatically disqualifies the use of a "legendary" tag (Merely derisively written it off as "grinding"). That a dozen dwarves in a group of over a hundred achieve the "legendary" greatness in a skill merely serves to further encourage other. "If all these fellows could become that good, so can I!".
Respect is one thing but it stretches the suspension of disbelief when you start making excuses how it's totally okay to have every mundane task spawn
droves of local
legends.
Literally everyone can be "legendary" at the same time. It waters the very concept down harder than homeopathy. It also means that if you have a grand master of a craft in a village of drooling fucktards, he gets no respect because he's one skill rank short. Respect and social status in general
need to be decoupled from specific skill ranks and be made features of their own, just like champions were.
As for humans not getting dwarven legends. Civilisations are almost never wholly incompatable. There will always be points of similarity along which you can get a legend that spreads to others that way. A goblin won't respect the legend of a great pump operator, but he will respect that of an excellent swordsman. A more agrarian society, by contrast, would respect millers, farmer, and pumpers more than warriors (Oh look, there goes that "champion" again. Freeloading bastards the lot of em").
So, the result is that humans would not have legendary pump operators because they would not respect such and thus such a rank would be unreachable. Thing is though, this would mean that other races are somehow inherently incapable of perfecting something just because it doesn't get them
chicks respect. It caps their skill for no reason. I see absolutely no reason a human miller with the same work experience would not have the same skill rank. Either that or you're suggesting that humans would still get legendary pump operators, they just wouldn't be
considered legendary. Even though it.. clearly says legendary. It also means that our not-legendary miller would be exempt from the economy because
some other settlement respects his work ethic.