Your sister definitely misunderstands the definition of a legend. Lady Gaga will never be one. Regardless of how many adoring fans she has or records she sells or songs that top charts. Bob Marley is a legend. Jimi Hendrix is a legend. Miles Davis is a legend. Mel Torme is a legend. If you don't recognize any of those names, just Wiki it! I'd also recommend listening to a sample of their music.
Oh I agree 100%, all of them. My sister is 16, so hopefully her mindset will mature quite a bit.