Here is the entry from "break a leg" in Robert Hendrickson, The Facts on File Dictionary of Word and Phrase Origins (1997):
break a leg! Break a leg! means "good luck" in theatrical circles, probably not because the great Sarah Bernhradt "had one leg an it would be good luck to be like her." No one is sure, but one theory has the expression deriving, possibly through Yiddish, from a German expression meaning "May you break your neck and your leg," for which I can find no satisfactory explanation. It may also have something to do with wishing someone a "big break," that is, good luck leading to success. Or bad luck like breaking a leg a leg might simply be wished because actors, a superstitious lot, have long believed that wishing them good luck guarantees something terrible will happen.
Nigel Rees, Cassell's Dictionary of Word and Phrase Origins (2002) has this take on the phrase:
break a leg! A traditional theatrical greeting given before a performance, especially a first night, because it is considered bad luck to wish anyone 'good luck' directly. Another version is snap a wrist! Partridge/[Dictionary of] Slang [and Unconventional English] has 'to break a leg' as 'to give birth to a bastard', dating from the seventeenth century, but that is probably unconnected. As also is the fact that John Wilkes Booth, an actor, broke his leg after assassinating President Lincoln in a theatre. The Morris Dictionary of Word and Phrase Origins (1977) has it based on a German good luck expression, Hals und Beinbruch {May you break your neck and your leg). Perhaps this entered theatrical speech (like several other expressions) from Yiddish.
Other theatrical good-luck expressions include merde! {French: 'shit'}, toy! toy! and in bocca al lupo {Italian: 'into the wolf's jaws'}, although this last has been heard in the form 'bocc' al lupo'.
And Christine Ammer, The Facts on File Dictionary of Clichés, second edition (2006), has this:
break a leg Good luck. There is some dispute as to when and where this seemingly nasty advice originated. It may be a translation of the German Hals und Beinbruch {Break your neck and leg), which allegedly originated among World War I aviators jocularly wishing each other well. In any event it became widespread in the theater, both in Germany and later in the United States, and then came into more general use. It still is most often addressed to performers of some kind.
All of this comes as something of a shock to me, since I was assured by a very trustworthy fourth-grade teacher, just before our school orchestra performed a recital on the stage at the far end of the lunchroom, that "legs" was theater talk for the pulley ropes that are used to slide the stage curtains open and shut, and that urging someone to "break a leg" was really encouragement to be so good that the curtains would be closed and opened multiple times for encores—so many times and so vigorously, in fact, that the ropes would break. Therefore, "breaking a leg" indicated achieving a theatrical triumph. (Something similar to this theory appears in the "Non-literal" subsection of the Wikipedia article on "break a leg.")
I have heard the expression "break a leg" all my conscious life (from the 1960s forward), and I believe that it is extremely well known today in the United States—hence its inclusion in a book of clichés. I do not know, however, how many people who use it are laboring under delusions of its supposedly benign meaning, foisted off on them by duplicitous elementary school teachers.