I'm also pretty sure you can break & recreate an LS with the same name.

Make a dummy LS and try it. The LS I'm in (not leader) has broken & reformed at least 2x since Retail Launch. Each time I've simply logged on and been told my LS no longer exists and then I go pick up a new one. It left an annoying empty spot in my LS list (which was later annoyingly filled by another LS) but other than that it was no big deal. ^^