I think it’s important to have respect for Tolkien’s lore but he didn’t fully flesh out his world which leaves lots of opportunities for Turbine to fill in the gaps.

For example this quote from Gandalf mentions that essentially most sentient creatures in Middle-earth used spells — both good and evil. He can only remember 200 of these spells which is but a fraction. Therefore it would seem that Tolkien fully intended to have magic woven into it’s fabric of his world.

“‘I once knew every spell in all the tongues of Elves or Men or Orcs, that was ever used for such a purpose. I can still remember ten score of them without searching in my mind.’

The Fellowship of the Ring, Book I, page 400″

That quote alone would justify a fully robust magic system in LOTR. I’m not sure why Turbine was somewhat timid in trying to realize some more magic in their MMO to balance out the current melee combat focus. I think the creation of the Runemaster is an attempt to address that gap.

Even the physical nature of the dwarves didn’t prevent them from using spells. Here’s a quote from the Hobbit that supports this:

“Then they brought up their ponies, and carried away the pots of gold, and buried them very secretly not far from the track by the river, putting a great many spells over them, just in case they ever had the chance to come back and recover them.

The Hobbit (51)”

Here’s a useful Middle-earth website called Principles of Tolkien’s Magic that is very enlightening and the source of both quotes:

http://www.darkshire.net/jhkim/rpg/lordoftherings/magic/principles.html