It may or may not be legal. It sounds like the original easement is not well written (e.g. missing a good legal description of the easement area). You should try to work this out informally with HOA so that there are not problems in the future. If you do not reach agreement you might consider mediation. If your attempts to negotiate an acceptable outcome are not successful you may want to retain an attorney to review you rights.
I'm not totally clear on the issue, but as I understand it, you should be able to use the portion of the easement area that is on your property, as long as you don't use it in any way that undercuts the purpose of the easement, i.e., slope maintenance. So landscaping it in a way that is consistent with that should be fine; building a structure or modifying the slope in a way that is not consistent with it would conflict with the purpose of the easement. I also agree with the other two comments.