Why they would make it illegal I don't honestly know, in any event it's coming up a year or so since they were last available so eventually they will all have flat batteries.
With these old beacons the only chance of it being detected is by an overflying aircraft so they are very limited in that sense. Given there is no guarantee of a detection maybe it's an issue of liability?
There are places (battery world for one) to dispose of old beacons, too many are winding up at garbage dumps-not very glamourous for the SAR folk.
The 121.5 part of the newer beacons is much weaker than it used to be and is intended for final homing when a satellite position has already been obtained. In many cases unless you are very close to the source this signal cannot be detected.
http://beacons.amsa.gov.au/ is a good reference for this stuff