Rather what reason is there for such software
not to be legal. If you are on the frontier of the law so to speak, peerguardian is a great software! Many files you download, you may not even be aware that they are indeed copyright protected and it would be very unfortunate to be caught for downloading something like that.

Be aware though - there has been fake peerguardian application circulating the web recently, which does the exact same thing as the original version.. but opposite

. you should always check the md5 sum of the application and ensure that it agrees with the real one (think it is listed on the offical homepage somewhere,
http://phoenixlabs.org/pg2/).