The devs want Exotic armor (and thus their Exotic perks) to be identifiable by sight for PvP activities.
Being able to apply the appearance of Exotics to Legendary armor would impair the ability of other players to do so, requiring them to either go into menus to inspect their opponents’ gear (in this case hovering over each armor piece to determine the [b][i]true[/i][/b] Exotic) or simply wait until they see the Exotic perk in action, potentially putting them at a disadvantage for having to wait.
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I feel that. An easy resolution to that concern would be to just disable appearance modifications for pvp or, more specifically, Ranked/Competitive modes in Crucible. Or to display the true armor to opponents while keeping the modifications to the appearance visible only to the player wearing them.