Can I name my game [any letter here]-TYPE without being worried about the legal issues (R-TYPE exists)? I know Lindows had to change it's name - but I guess that's really another story..

If your game is pretty much in anyway similar to R-TYPE, I wouldn't even consider it.

sounds safe. I'd also dispense with the capitalization. Go for something like -Type or -type or even Rtype, rType, rTYPE...