The short answer is yes, it's legal.
In a short sale, there are 3 parties involved instead of 2 and all have to agree on all the offer's terms and conditions for the deal to go through.
Some Realtors like to have a back up offer in case the lender rejects the first offer. If they are still allowing showings, they should be letting the other Realtor know this.
Do you have a verbal approval from the lender? Have you gotten a status from your Realtor?
If not, ask for the status. You really can't do much until there is a written approval from the lender.