Peter, I still think that you are not quite understanding the legato function. The whole point is that you do play them legato, in the same way as you do on a keyboard. The fact that you can't do the same when using the sustain pedal is a huge plus, not a minus. It is the only way to force a start note, whilst playing legato. May I also respectfully suggest that using the sustain pedal is not a normal legato technique; it is a sustain technique that is often used because of bad keyboard skills. Not saying anything about yours though.[;)]
I still suggest that you post a MIDI file containing those "blips". I only get those when the legato note runs out, and often in these cases (such as with solo strings) the transition material heard with the legato would be totally inappropriate, as a bow is only a certain length and would need to change anyway. I agree that if all legato notes were looped it would make things easier, but it very rarely causes me problems.
However, if you find that you hear too much transition material between notes, then just raise the release time, so that it is partially obscured.
DG