Personally, I am not dismantling my old legendary gear so far, because I am hoping it will be upgradeable in the future. But yes, equip whatever has the highest attack or defense number for now, which may well be green or blue.

Equip anything that is an upgrade. When you take engrams to the cryptarch, only identify one at a time then hit start to compare. If it's better, equip it, go back and identify the next piece. Repeat that process until you're out of engrams. The high your light level, the better the engrams will decrypt. Don't decrypt them all at once, it's a waste. Once you find a legendary or exotic from year 2 that you like, you will feed the blues that you find into your legendaries and exotics IF they are better. To save on marks, I usually only do this when the gear provides a defense or attack rating more than a value of 10. If you find a duplicate legendary that you already own, dismantle it for the marks. There's also the option of leveling it up before dismantling it, so you get a little more marks than usual. But don't feed any blues into it, that would be counter productive. Once you replace all of your old gear, you can keep it for classic crucible for the perks, or you can dismantle them for the exotic shards/motes. You'll need those to upgrade your gear further.

Don't immediately dismantle stuff, some of it will get you a good chunk into the story campaign, I ran with a yr 1 Monte Carlo through Regicide, but you will end up replacing all of it. You'll probably be swapping between greens and blues until hitting 40, as the attack & defense values are tied to the items level requirement. Also, there is a topic about getting to 280 light as quickly as possible that would probably be beneficial to look at if you haven't already.

I got rid of all my legendary items from year 1 and the exotic helmets I got a year 2 version of. In order to progress through the dreadnaught and some other content like a lot of the taken events you'll need to start over with greens, blues, then new legendary and exotic. Do the Petra taken war quest and you should have at least 1 legendary armor engram drop and maybe a vanguard package plus a lot of blues and greens. Edit - I held off replacing the items until the newer ones were in the 190's. Going from your 160 legendary to a 162 green with maybe 1 good perk, if that, wasn't worth it, imho.

I kept some pvp gear, and a few treasures from vanilla, and dismantled everything else...the exotics you can always get back just hang on to the shards... But I think its safe to dismantle year one gear...after you attain gear to replace... PSA, get to level 36 and spam strikes, till 260 light, then spam heroics till 280, and spam nightfalls after that...the Engrams that drop from ADDS will be plentiful... Equip all gear that increases your light, decode 1 engram at a time, check for better gear, equip it before decoding the next engram... You will be 280+ within 6-8 hours...

Gear from TTK have better stats than Year 1 gear. Engrams now become items with Light close to your current light (If I am Light 230 I could get a weapon from an engram with 210~250 Attack) Infusion upgrades the Light of your gear dismantling a similar rarity piece of gear with higher values, the result will be a value similar to the dismantled item. I will personally save some Year 1 gear, just as a collection and to use it on the Crucible

Dont dismantle anything yet! New greens and blues would be powerful. I do suggest swapping out your old exotic/legendary armor for the new greens and blues which gives you more light level/def value. For the weapons, hold on to the old stuff for taking out shields, unless the new blues are really good.