I couldn't agree more. I actually found this thread because I was curious after seeing players with surnames. I had heard a tiny bit about Legacy being the reason but I would never have thought it worked like it does...
I too have a variety of characters for which this ridiculous system just ruins. I don't even play on a RP server, just play around with it on a pve server with friends, but I take naming very very seriously, and this really upset me. I wanted my Twi'lek's to be obscure members of an already existing house and my humans to be unrelated and... it just ruined it. Now, if I'm lucky, one character will get a last name and the rest will be bastards. Great.
I wish Bioware had thought this out a bit more before implementing it.