Tomahawk bites my pitbull's legs ALL the time, but she allows it and doesn't seem to mind it. Oddly enough, he only does this with her. I have never seen him go for another dog's legs. I think he knows that in his relationship to Doja, he plays more of a dominant role and can do as he pleases, but with another dog, it may cause him to get in trouble lol.
I would say that if the current puppy playmate doesn't seem too irked about it them let them at it, they are puppies after all. I would also see how he is with other dogs arond his age to see whether he does it to all of them or just the ones he feels comfortable with. That way you know if he knows when to do it or not. If he does it with EVERY single dog, then I would correct it. Like you stated, it may cause a fight if the other dog does not approve of it.
It's always hard trying to figure out what is acceptable and what isn't. If anything, do what you think is best for Billy's safety.