1) Is this legal (to trade Blizzard balance for FG)

2) What is the typical rate people are paying/offering ?

As far as I know, the d2jsp forum has been ruined for a while by this community and it's now a third-party website. Unfortunately, Blizzard can do nothing because most of the players on Diablo II have a d2jsp account.

I think he means is it legal to trade the $$ on a blizzard acc balance for fg on d2jsp, not whether blizz cares or not

That's what I thought too. I meant Blizzard doesn't trust this community because most of them are just trolls, modders and idiots.

It is possible, however there are certain restrictions.
Please read carefully post #4:
http://forums.d2jsp.org/topic.php?t=79187663&f=258&p=534524404

Only if you have Donor Forum Access, I'd have to imagine it'd be possible there and ONLY there.