I don't think Freon (R-12, if I remember correctly) is "illegal." It just can't be used in new cars. If it were made completely illegal, people with older cars would never be able to fix their air conditioning systems.
Conversions are too expensive for a lot of people, and often don't work as well as the original system.
The "new" refrigerant (R-124 or R-135 or something like that...but my memory is terrible here...) is what's in new cars. For automotive air conditioning to work, we still need to use a refrigerant of some sort. Something that's gaseous at room temperature and liquid at very low temperatures and/or very high pressures.
I don't know what type of refrigerant the Prius uses, but I know it's not R-12.