no legal way we could sit in the seats allocated to us
Er, I don't think you are doing anything illegal by switching within your group or even with another passenger.
Reservations systems (which handle bookings, passenger names, ages, etc. and Departure Control systems (which handle seat allocation and other things) are often not that closely linked. While there is some crossover their integration certainly isn't perfect. Some LCCs, who've recently moved to assigned seating, have had to add this functionality on top of a basic reservations system. It likely is going to be a learning curve until they achieve perfection.
Take their assignments to be 'suggestions' and seat yourselves where it makes sense to.
In very rare cases you may find that the crew will not want you to move too much in the aircraft for weight and balance reasons. But I don't think this happens that often any more.