OP. I totally understand why this is frustrating to you. But I do honestly believe that the code/server/engine/SE something is so messed up they really can't fix it atm. Below I posted a link to a youtube videos a lala posted last week I think of him being in FFXIV jail goofing around. His crime? Poor taste in a LS name. At the end, the GM tells him, that player needs to go talk to the npc to change the ls name/delete the shell as he (the GM) cannot.

http://www.youtube.com/watch?v=hZooIdd0zqY

Again, not saying it's right that you can't just have the Mods/GMs delete your old LS so that you can re-build it again, but when they tell you they 'can't' I believe it to be true.