Can use Holy Avenger or Holy Great Sword to transmute into:
+3 Holy Avenger - Paladin
4, 6, 7, 7, 8, 9, 11*, 12*
* See token guide for same ability on +2 Holy Avenger
+3 dam. to evil creatures
+1 to all saves for party
Note that I think I would prefer the +1 saves would require showing the token to the room DM but wouldn't require wielding it so that it wasn't baked into the party card. I'd compare with Walking Stick's +2 to Reflex saves ability even though this is far less conditional.
+5 Holy Avenger - Paladin
6, 8, 9, 9, 10, 11, 13*, 14*
* See token guide for same ability on +2 Holy Avenger
+3 dam. to evil creatures
+2 to all saves for party
The current Holy Avenger ability is wordy, so it doesn't play well with other abilities, leading to the Polymorphification of the text box. The second ability is right off of Holy Great Sword but doesn't need added verbiage for Paladin only due to these already requiring a Paladin. A callback and makes even more sense when you can use a HGS to make the relic. The saves ability fits with the aura of protection theme.
Why not make guarding better, Lay On Hands better, etc.?
Few reasons. One, this is a weapon. Two, and more importantly, just giving a host of abilities to one token removes design space for other tokens for the class and overshadows other tokens even if you could combine Ring of Soothing Touch and another Lay On Hands pumper. Sure, these abilities don't push a facet of the class card, but I'd rather other, nonweapon tokens did. If the Paladin transmute was going to be a neck slot, then, of course, I'd push guarding being better while not having the additional damage against evil creatures. I realize the Amulet of Guarding upgrade is not likely to happen for a long, long time, but that's preserved design space.
Is this underpowered? Legendary averages 10 damage, 13 against evil. Deathcleaver averages just under 13 damage, so less against evil. Asher's averages 10.5 with 2 poison baked in. I don't think these values are that bad, though without the +3 vs evil doesn't look as good. Conditional nuke ability which I have no idea how often that would kick in and how often it would matter if it did. +2 saves for everyone is like how the Lute just makes the party noticeably powered up. I thought about +2 at relic, but that actually seemed a bit much for something that affects 10 characters at that level and left the Legendary either not improving or wanting to get even bigger.
Would I make one? Yeah. I don't care a lot about weapons (that don't increase spell damage or heal), but a weapon that helps everyone appeals to me - a poor Dungeoneer who doesn't play Paladin as much as he'd like. Would I look at Thor and be "Why, oh why does Thor's exist?" any more than I already do? Probably not.
Is it overpowered? I think the Druid necklace is cool, but it's very limited. I don't really have any feel for Rogue play. The Lute seems crazy powerful to me, as the Bard already pumps the party and just gets more of the same without being required to do anything unusual. This legendary is not pushing a particular style of play, and it has some similarities to the Lute, but it's not doing anything that's terribly game changing unless the save bonus matters fairly often. (I considered a save reroll, but that seemed too derivative.)