If I have an ally card, let's say Luke, and I'm playing Legendary, does Luke have to activate during my heroes' first activation or can he use his turn during their second activation? Obviously the heroes alternate, but what is the timing on the ally within a round?

You can choose to activate your ally whenver you want (when it's the Rebel players' turn to activate). You don't do it at the same time as a hero.

From the "Rebel Allies" section of the Rules Reference:

"When it is their opportunity to resolve an activation, Rebel players can choose to activate an ally, collectively controlling it. After activating an ally, exhaust its Deployment card, and then the Imperial player performs an activation."

I do believe the rules are a bit confusing, as "their" in the above paragraph looks like it could refer to a specific hero, which would mean they activate alongside a hero, but I believe it refers to "Rebel players" as a group, as that's in the same sentence, which would mean they get their own activation.

Oh, I know they don't activate alongside a hero. What I meant was that in a legendary game your heroes get activate twice per round and they switch off. My question was can the ally wait to take his turn during the second activation of the heroes. So could I go: 1: Gideon, Jyn, 2: Gideon, Luke, Jyn? Or must Luke be in the first activation sequence? I'm assuming Luke can wait until the second sequence because the rules say allies CAN activate, and not MUST.

Yeah, I'm pretty sure you can choose to do it whenever you want in the sequence. I don't see anything that says otherwise.

Aye, I would say anytime during the Rebel players turn. I would have them (the Rebel players) pick whoever they want to go in the order they wish, as long as it's of course during their turn.