Running Conventional Locomotives alongside Command locomotives with Legacy and ZW-L

The switch defines the operation of the transformer, not the trains.  The signal is present either way from the trains' perspective, so they will actually ONLY operate in Legacy mode when a base is present (i.e., it's impossible to run a Legacy engine with the handles when a base signal is present).

In conventional mode, the transformer will output whatever voltage is dialed up with the physical handles on the transformer.

You should set the transformer switch to Command mode in order to be able to control the voltage from each handle with the remote.  This will allow you to control your conventional engines on whichever loop you have them on.  (you advance the physical handle first (which will not actually put voltage on the track), then you have control with the remote)

The slight side effect here is that you also need to dial up the voltage with the remote before you send engine commands to run Legacy engines as well.  That's the nature of mixing the two types of engines simultaneously. 

One thing you should consider is setting the transformer outputs to engines rather than tracks.  This allows you to set the "engine" type to a transformer.  This allows conventional engines to be cycled through directional sequences without needing to dial the voltage back up each time you interrupt the power.

-Dave

Thanks for the explanation Dave.