The idea that 1st century Judaism was intensely legalistic and that Jesus was a radical break from that is mostly Christian propaganda.
Some Jews were legalists, others were moderate, and still others had an esoteric bent and regarded the Law as an outward manifestation of certain deeper spiritual principles. The early Christians were obviously in the latter camp, but they weren't alone. In fact the Pharisees were pretty liberal too, despite their unfair presentation in the Gospels. I'd call them moderates. In any case they were far from the legalists that they are often accused of being.
The later prophetic tradition was already well on its way to developing a worldview in which moral principles trumped the letter of the law. See Hosea, for example. Jesus can be seen as the logical extension of that. Note that he doesn't repudiate the Law because in his mind it's the principle rather than the letter. Even his own moral teachings are meant to hint at deeper principles, not just enumerate rules for people to follow (though try telling that to a lot of Christians today).
As for the OP, I think it's pretty clear Jesus had no intention to form a separate religion called Christianity. He belonged to a particular strand of 1st-century Judaism, probably harbored hopes that other Jews would come around to his way of seeing things, and his followers continued to regard themselves as Jews for some time after his death. The Judaism of the time was pretty diverse at any rate. In the end the split was probably more political than religious as such. And once it happened, and once Christianity became an almost totally non-Jewish thing (i.e. populated by people with no background in Judaism whatsoever), the two sides of the family tree drifted very far apart and basically stopped talking to each other.
