The Lost Sword is overrated, but only because it is the most "legendary" weapon in the game. Given that, a lot of people will just naturally want to have, just to say that they do.
Personally I would like to get the weapon, but I'm not gonna make a big deal about it. The only problem I have with this weapon are a lot of the people looking for it. And by that I mean, the people who constantly ask in game, "Where do I find the lost sword???", "I need that sword!", and many other various things.
Even if I don't find it though, i'm happy with my other famed weapons
edit: Another reason the weapon is overrated is due to it being a very good (although not the best) weapon for PvP. Using the ghost skill allows you to take half damage, making things that much easier.