More for the sake of argument than anything else, do you recall who the letter was by? I mean if Gygax or Greenwood were writing it has a bit more weight than a fanboy.
I only was in an adventure or two with them and they seemed overpowered. Also, remember that the AD&D folks thought that gnomes and halflings were balanced with the other races... I think that often players have a quite different perspective fromt he creators.
I've never played any of the LotR RPGs. I do have some of the cards for the collectible card game.
We've talked in the forums here about doing a Middle Earth Worldhack, and each time we talk about it I always think about whether players can play the main characters from the stories or whether they (the main characters) will be NPCs or just mentioned in stories. This goes hand in hand with the magic level and who has access to it. But, even if the we allow Gandalf as a PC, how do we handle the magic? I'm a bit of a purist, so I would go for the low magic option with much of it being handled in events outside of combat or given to items to be used by PCs.