I have found that the best way to convert non-DRM PDFs is to use the Publisher version of MobiPocket Creator.
http://www.mobipocket.com/en/downloadsoft /productdetailscreator.asp It's free and very easy to use. The program gives both an HTML and a PRC conversion. Use Calibre to convert the result to EPUB. Try converting the PRC file first but use the HTML if the result isn't satisfactory. In my experience, you end up with a much cleaner EPUB with less effort than you get by using Calibre (a great program) to convert the PDF directly to EPUB.
As to whether it is legit to strip DRM, I leave that to you. But many argue that it's okay if the result is strictly to aid your personal use of the DRMed material.