I'm so glad I didn't get a road legal dual sport kit because I did everything myself for a whole lot less money. You should be able to do everything yourself for a small fraction of the cost of a new dual sport kit. Here is my take:

1. The first thing you should do is go down to your local Motor Vehicle Department or check out their Website, or check the Dual Sport Requirements Per State document in Tech section of 4Strokes.com and learn exactly what is required to make your dirt bike road legal. It varies state-to-state, and then use that to determine what will need to be done. You can also check our Forums for dual sport topics.
2. You can easily get a three-wire (for running lights) socket to power a brake and running light. I modified my two-wire brake light socket by simply soldering in a third wire to power a two-filament bulb, maintaining the running light and gaining a brake light. I ran this third wire in the existing plastic sheath.
3. I would suggest getting only one brake light switch, a hydraulic switch for the rear brake. My street bike only used the rear brake for turning on the brake light. Do you really need the light to come on with the front brake too? If you do a search on the Internet for "hydraulic brake light switch" you'll come up with many Websites that sell a hydraulic brake light switch to fit your existing brake line. There are typically two different kinds -- one for Brembo and one for Japanese. They sell for $20.
4. I got some nice low profile turn signals, but haven't had a need to install/wire them in the state I am located now. You could easily wire them in and install a blinker. You can also get a street-bike style switch assembly for about $60.
5. Keeping the factory headlight is fine. Doing so will not need boosting the alternator output. However, does your Motor Vehicle Department say the headlight must be Motor Vehicle Department (DOT) approved? While most police will not be checking for this approval, it is something to keep in mind. An upgrade may be desired if you don't want to take your chances, although I'd be surprised if a cop was looking for a headlight to be Motor Vehicle Department (DOT) approved. Be sure to check your state requirement for a hi/low beam. If a hi/low beam is required you will need to wire in that switch also.
6. No battery is needed unless, as stated above, your Motor Vehicle Department requires a headlight to be illuminated with the engine off. If so, the solution is simple. Just get a small 12VDC battery pack and temporarily strap it on somewhere. Get a big enough battery so it'll power the lights for at least a couple minutes, just long enough to pass the inspection and then whip that bad boy off.
7. You should not need to boost the alternator output (rewind the stator). Stock output will be fine if all you're doing is powering the stock (35 watt) headlight, taillight and brake light, and possibly the turn signals. If you want higher output for aftermarket lights check the Tech section for stator rewinding or have yours rewound by a company.
8. If there is a requirement for the bike to have turn signals, then by all means install them. You can even wire them and get them working. I would at least wire them partially so a casual inspection will show wires coming out of them, giving the appearance that they are working and legitimate. Of course, if an inspection is required, you'll have to have them working (no big deal). Just use a single pull, double throw switch. Just having them installed on the bike might satisfy the authorities if you get pulled over.

I have a 2002 XR250R with a stock (35 watt) headlight, running the stock taillight (5 watts) modified for use as a brake light (20 watts). No problem at all - works fine. The headlight will dim a little with the brake applied at slow/idle speeds, but no big deal. The light is pretty dim for night time use. If I used it more at night I'd install my 50 watt halogen light I got for this, but then I'd want to rewind the stator as the stock 75 watt output (at 5K RPM) will be pretty low. I would say keeping the stock (35 watt) headlight along with a taillight/brake light and turn signals will be okay. The voltage may dip too low to power the turn signals if the headlight and brake lights are on at the same time. If that's the case, then I'd rewind the stator (several links appear here). I would not use a battery (it's heavier, you'll have to find a place to mount it, something else to go bad/replace/maintain, and you'll have to convert the alternator AC output to DC, which means adding a rectifier.) unless absolutely necessary.

Credits: Article written and submitted by Stu and edited by 4Strokes.com

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