I’d say club legend criteria is someone who has made an outstanding contribution to the club. For example, either in what they won whilst playing for the club, Dean record scorer, Southall most international caps and appearances and above all else world class players who have worn the shirt with distinction and pride. Naturally I never saw them play but I think we could add Tommy Lawton and Joe Mercer to that group you mentioned. Both were outstanding footballers and appreciated by all fans in their heyday.
No legends since 1987 then. I don't think anybody from that FA Cup win in 95 could be classed a legend, obviously bar Big Nev who had already cemented his legendary status long before that.
I personally think the term legend is very subjective, many people (not me) class Duncan as a legend as he represented the Dogs of War never-give-up attitude of the 90s which saw us stay in the league despite our shortcomings, something a lot of Scousers could relate to.
I look at Tim Cahill and he's the closest to a legend for me because he was a virtual nobody when he joined us and could surely have jumped ship to much better teams in his time here, yet became probably a bigger Blue than most of us and you know even now he's thankful to have had the opportunity to represent Everton. And that's not mentioning how influential he was on the pitch.
Phil Jagielka was, at best, a decent Premier League centre back. He is a poor captain, has a pretty poor goalscoring record as a centre back and has been a mainstay of a number of piss poor back fours that we've had over the years. He was good with Lescott, but maybe that's more credit to Lescott who scored way more goals and looked far more dangerous than Jagielka.
Basically, though, if somebody wants to call player x, y or z a legend I have no problem with it, as they've probably got their own personal reasons for it and that's something we cannot and should not argue with.