I've had the same thought many times. I would love to experience an epic crpg in the Tolkien universe. Something in 1st\3rd person where you could explore Middle-earth .
The best Tolkien cRPG I ever experienced was via a NWN persistant world. The people that made it understood Middle Earth down to the finest detail, and it showed in this mod.
Somebody also made a convincing Middle Earth mod for Age Of Wonders: Shadow Magic.
It seems the best Middle Earth stuff has been via fan-made mods of other games, the licensed stuff just doesn't seem to come off very well. I do want to check out LOTRO some day though.