I apologize for the use of the word "legally". It is an interpretation of the FAA and a guideline of the CBO. I refer you to he FAA's guidelines for Model Aircraft at
https://www.faa.gov/uas/model_aircraft/ and the AMA (and others) "Know Before You Fly" at
http://knowbeforeyoufly.org/for-recreational-users/
I have not read the NPRM, but I would be surprised if that limit (or the 500' limit used for commercial UAS) does not come up.
Then of course there is the FAA's "AC 91-57, Model Aircraft Operation Standards", (which may or may not have been rescinded), which says:
Do not fly model aircraft higher than 400 feet above the surface.
From the "Official" AMA 2015 Safety Code
Academy of Model Aeronautics National Model Aircraft Safety CodeEffective January 1, 2014
A. GENERAL: A model aircraft is a non-human-carrying aircraft capable of sustained flight in the atmosphere. It may not exceed limitations of this code and is
intended exclusively for sport, recreation, education and/or competition. All model flights must be conducted in accordance with this safety code and any
additional rules specific to the flying site.
1. Model aircraft will not be flown:
(a) In a careless or reckless manner.
(b) At a location where model aircraft activities are prohibited.
2. Model aircraft pilots will:
(a) Yield the right of way to all human-carrying aircraft.
(b) See and avoid all aircraft and a spotter must be used when appropriate. (AMA Document #540-D.)
(c) Not fly higher than approximately 400 feet above ground level within three (3) miles of an airport without notifying the airport operator.
(d) Not interfere with operations and traffic patterns at any airport, heliport or seaplane base except where there is a mixed use agreement.
(e) Not exceed a takeoff weight, including fuel, of 55 pounds unless in compliance with the AMA Large Model Airplane program. (AMA Document 520-A.)
(f) Ensure the aircraft is identified with the name and address or AMA number of the owner on the inside or affixed to the outside of the model aircraft. (This
does not apply to model aircraft flown indoors.)
(g) Not operate aircraft with metal-blade propellers or with gaseous boosts except for helicopters operated under the provisions of AMA Document #555.
(h) Not operate model aircraft while under the influence of alcohol or while using any drug that could adversely affect the pilot’s ability to safely control the
model.
Let's just leave it as being subject to further clarification, from both the FAA and the AMA.