(is it legal?)
We get this one all the time... Here's the official answer: YES...and No.

United States (YES): The United States Codes under Title 18, Chapter 17, and Section 331, "prohibits the mutilation, diminution and falsification of United States coinage." However, it has been the opinion of some individual officers at the Treasury Department, though without any indication of approval, the foregoing statute does not prohibit the mutiliation of coins if done without fraudulent intent or if the mutilated coins are not used fraudulently.

United Kingdom (YES): It is also legal to elongate coins in the UK for the same reasons at it is legal in the US. A common misconception is that it is illegal to elongate the coin because it defaces the image of the queen, however, we have been assured by a collector in the UK that it is not against the law to flatten the Queen's head... so long as it is on a penny.

Canada (NO): Section 11(1) of the Currency Act states that "no person shall, except in accordance with a licence granted by the Minister [Minister of Finance], melt down, break up or use otherwise than as currency any coin that is current and legal tender in Canada." Furthermore, Section 456 of the Criminal Code of Canada makes it a criminal offence to deface circulation coins: "Every one who: (a)defaces a current coin, or (b)utters a current coin that has been defaced, is guilty of an offence punishable on summary conviction." The offence is not dependent on fraudulent intent.
-Royal Canadian Mint