You can skip the offending worldspace, but not the entire mod. That's probably all you'd need to do though.
In Win 7, open C:\Users\[YourName]\AppData\Local\Oblivion\Plugins.tes4viewsettings
Note that I said AppData not "Application Data" - AppData will be hidden, but you can just type it into the address bar at the top.
Note also that the latest version of TES4LODGen uses Plugins.tes4viewsettings and NOT Plugins.tes4lodgensettings like the older versions did.
Scroll to the bottom of the file and add the following:
[Default]Rule=Replace[Worldspace]00000LegionValley=Skip