I assume it must be legal, because giveaways of all kinds abound on the internet, especially in the blogosphere.
If you want to give away some fantasy/sci fi ebooks, just put out a call on this board and <other popular ereader forum which shall remain nameless>, asking authors to donate ebooks. You should get a ton of responses. By listing their book on your site, you are providing a cheap promotional opportunity for the author, and you get a prize to give away in return. It's a win-win.
Scott Nicholson has a 100-ebook giveaway going on his
http://hauntedcomputer.com site right now. Well, maybe it's not 100, but a whole lot. All he did was ask.
--Maria