Not for the legions no, the armor was supposed to be given only to the members of the dragon order, or something along those lines, i think it said that something like 5 people in all history wore it including the CoC
That is I believe correct. Plus, it's a reward you get for completing the central story in the game, it certainly shouldn't be weaker than items that you can get by killing bandits, which it is.
My guess as to why the player character doesn't get to be the one to banish Dagon, though, at least, the reason from a narrative point of view (as far as the in-story explanation, it's because Martin could use the Amulet of Kings and you couldn't, and there wasn't any other means handy to defeat a Daedric Price that the soon to be named Champion of Cyrodiil had at the time.) is that Bethesda probably felt that having the main character be a chosen one who saves the world from destruction is kind of overused, so they decided to have someone else save the world and have you be the one who helps him get there. The problem is, Bethesda neglected to take into account
why, if a story involves a world threatening crisis, it's usually the main character who has to stop it, and failed to provide an extremely good story that didn't have you saving the world. Plus, you STILL do all the work, Martin just sat around, gave you errands, and then went and sacrificed himself at the end (rendering the original purpose you set out for entirely pointless, because while Mehrunes Dagon was stopped, the heir you set out to find went and died, Tamriel is still left without an emperor, and now, there isn't even any heir left to take over the position. Nice job breaking it Martin.) yet he gets all the credit anyway.
Then again, since Elder Scrolls heroes tend to fade into obscurity (With the exception of a few bits of dialog and maybe a book or two referring to their adventures, using their titles of course, so as not to create a canon identity for the characters.) it isn't surprising. But the Nerevarine at least got the credit in his game and only faded into obscurity in the next one.