I let XM lapse on my 04 TL because I don't drive the car enough to justify paying for it. My most recent 1 year $77 special expired in June, and XM continued with a 2 month grace period which they just billed me $29 for. Is this legit?

 

I would say no, as long as you didn't authorize it. Make sure on your initial renewal that it didn't say anything about a grace period. They are usually on top of the expirations. They got mine the day of or late the following day, I dont exactly remember. Many other people have said they were cut off pretty quickly also.
If you're paid up to a certain month/day, it's up to them to turn it off. If they go past that time, it's their bad.