I have mixed feelings about it. It's by Turbine, who also trashed one of my childhood icons by doing a wretched excuse for Dungeons and Dragons Online. I found that game unplayable and unenjoyable - not least because of the clunky UI that was totally inorganic to the environment. It was also exceedingly difficult, and rewarded certain styles of play far more than others.
But... while LOTRO shares the same blasted UI, it has a very different gameplay experience. The starting quests are actually really cool - for instance, as Angthelion, my Sindarin Lore-Master, I started out in the (made up) Elven shelter of Belhellen. I didn't like that they didn't use one of Tolkien's locations, which of course are a huge part of the charm of the books - but on the other hand, I went through a quest involving Elrond and the fall of that city to some greedy Dwarves. Once the quest is complete, you skip through hundreds and hundreds of years to your return -- a neat way to demonstrate the vast age of Tolkien's elves.
I did the starting quests for Dwarves (who interact with trolls and Gandalf) and Men (who chase off one of the Black Riders) ... all of them made good hints at the epic scope of events in Middle Earth, while being a manageable experience for new characters. Regrettably, other liberties are taken - strange creatures that do not appear in the books, etc. It's sort of inevitable that "newbie" quests is going to involve a lot of people running around in a big field kicking rats and stealing their teeth - but it doesn't fit in with Lord of the Rings at all.
The graphics are quite lovely, particularly the autmnal majesty of the elven lands. I've yet to explore all of Middle Earth, which of course i want to do. I don't understand why starting characters can't just start in the Shire, or Gondor, or Rohan, or Rivendell or Lorien - but have to start in one of the "new" areas. 90% of the appeal to me is wandering around in Middle Earth.. why not hook me with the wonder right away?
Character creation is extremely simple - you choose a race (Man, Dwarf, Elf, Hobbit) and a class (Guardian, Champion, Captain, Burglar, Loremaster, Hunter, Minstrel) and customize your hair and face. That's it - no skills, stats or anything else. As a result, every starting character is exactly the same - and levelling allows no opportunity for differentiation. Every 2nd level Loremaster gets the same new ability, and that's it.
Ultimately, I loved the Middle-Earthness of it, and I want to run around and see the Shire, Khazad-Dum, Rivendell, Rohan, Edoras, Minas Tirith ... everywhere! But playing the game seems an awful lot like Everquest, only even more restrictive and monotonous. I'm not sure this was a worthy company to deal with this license ... but then, who would have been?