I've a web ap, which makes use of SL5 plugins, I'd like to replace the default 'To view this content please install..' image, which comes up on a screen when SL isn't installed with my own one, pointing to the same URL. Wonder if I can to do so from a legal standpoint of view?
I can't speak from a legal standpoint, but Microsoft encourage you to customize the Silverlight install process, and integrate it with your site. For example Tim Heuer has written about this a few times and gives examples of alternate images. Here's an official guide. In particular they say
You should replace this image with your own content, or incorporate it into your content.