I think it does, and that's being as objective as I can about the whole thing...
If Fred leaves, he walks into a ready-to-win situation. If he loses, people immediately question his ability. If he gets a ring, there will be people saying "my dog could have coached that team to the Finals". He didn't build the program, or recruit any of those players. Maybe he even wins two Finals, back-to-back, but will anyone really care after that? Look at how much flack Spoelstra's getting for not being able to coach without the game's best player on his roster. NBA fans have very, very short memories...as far as his NBA legacy goes, unless he turns out to be the next Phil Jackson, he's probably just going to be another name on a very long list of unmemorable NBA coaches.
Now, regarding his legacy at Iowa State, it'll absolutely be changed...not just for what he's done in the past, but what he could have been if he'd stayed. He's walking away from what could be the best team Iowa State's ever fielded, and an opportunity to have gone from college basketball's cellar to one of its strongest programs in just a few years. If he sustains it into the future, there's no reason he couldn't become the next Jim Calhoun/Tom Izzo/Billy Donovan/Jim Boeheim/Bo Ryan. Guys like that are rightfully heralded as creating powerhouse programs from the ground up, and reaping the success over many years. That's a real challenge...building something from almost nothing, and watch it dominate the sport. Not many people can say they've done that, and nobody forgets the ones who do.
So yes, it definitely changes his legacy...especially what his legacy could be. He could bolt for the NBA, and assuming he's able to win a ring, get lumped in with the likes of Rick Carlisle and Erik Spolestra. Or he could stay at Iowa State, continue one of the most rapid turnarounds in history, turn the school he's loved since he was a young boy into a national power, and unquestionably join the ranks of college basketball's elite coaches.