You have definitely not read the mercy system right - only after pulling 200 ancients without any lego does it even start increasing your odds, worst case scenario it might take you 220 ancients before getting the first lego. 

If you meant sacred shards, which seems more likely considering how many champions you already have, that mercy system kicks in after 12 sacreds without a lego, but it only increases the chance by 2 percent each time, so it could still take a few dozen sacreds before you get a single lego, if you're unlucky. 

Anyway. I'd suggest you get Warmaiden to 50 next, although not necessarily to 60 because she's kind of a one trick pony who will get replaced the minute you get a better AOE Decrease Defense option. Apo to 60 makes sense although it's not super urgent. Basher is worth considering for 60 as well, can be strong in arena if used right.  

Your next priority, other than leveling champions, is dungeon progress - primarily dragon. Can you farm dragon 13 or higher already? And of course CB, you should always be trying to improve on CB - the good thing is that dragon and CB largely overlap in terms of requirements, poisoners are good in both. 

You are right, I'm talking about sacred shards, and at least according to the ingame info they have basically a guarnateed lego from sacred shards within the first few. The exact quote when I click on Mercy System is "As a new player, your Mercy System for Sacred Shards will activate early to help you summon your first Legendary Champion from Sacred Shards. Your Mercy system will activate after your first Sacred Shard, and your chances of summoning a Legendary from Sacred Shards will double (6% on the first, 12% on the second, 24% on the third, and so on) with every consecutive Sacred Shard - until you summon a Legendary Champion, at which point your odds of getting a Legendary Champion from Sacred Shards will reset to those displayed in the Default Summoning Chances table".

Right now I don't have the DPS to clear dragon 12, I just can't break through his shield fast enough to stop him from stunning the whole team. I've tried switching in some of my poisoning champs just to increase the dps, but they tend not to survive long enough to make a difference.

I even struggle to break the shield on dragon 11, but with MM and Apo I don't have to worry about dying from the stun/damage. It's part of why I was thinking about 6* elhain just to increase dps. I definitely plan on getting warmaiden up, she's actually one of the newest champions I got (didn't drop at all till I tried farming for her specifically in brutal).

Seriously? Never heard of that before... if so, awesome for you but don't get used to it, lol, it will be a one-time deal. Hope that first lego is a good one, then. 

Regarding the dragon, do you have decrease defense and decrease attack on him during those fights, as well as on the waves? If not, you should - Warmaiden, Infernal Baroness, whoever you need to get those debuffs. Poison is good to avoid that stun, but indeed you'd need poisoners that are a bit better than outlaw monk. I don't suppose you have a Frozen Banshee? Or even a Gravechill Killer? 

I'm definitely only expecting the 1 legendary, and nothing more for months at least (my luck usually is bad, and apart from MM and Apo which I got really lucky with I don't really have any other champs that feel very useful so I expect my luck to transfer over to this game). Will probably wait till a 10x event just to try to ensure I get something good.

In regards to the dragon I have Coffin Smasher which does the ATK down (though I've booked him up to lvl 8 tombfire, but his mallet crescendo is still lvl 2 so stuck at 20% chance). I would replace him with infernal for atk down, but he has my only poison that survives to dragon (toxic set+hp burn on tombfire). 

My current dragon team is MM, Apo, Elhain, Coffin Smasher, and 5th I have been testing out different chars trying to find one that fits. 

I am fairly certain that a player has a bigger chance of getting a lego from a blue shard as compared to any other shard at the end of the day