While WB can be trusted to bungle quite a lot of things, they can be at least partially excused thanks to licensing issues, not to mention a lawsuit over some ridiculous achievements in their IP-pimping department. Stuff like slot machines for example.
The last time LOTRO did a Hobbit tie-in (about one year ago), it resulted in a buggy, detached and half-arsed instances/dungeons, that suffered from a mass of both short- and long-term flaws; Turbine has also managed to add several long-term "bugs" (or, if you believe Turbine - bugs, but they are not exactly trustworthy after reintroducing the same flaw thrice during several months) and design paradigms (since they were adamant many of *those* were WAI). Both pretty much wrecked item distribution and advancement ladder for an entire expansion, including that Hobbit tie-in period.
WB seems able to commit Shadows of Mordor level of nonsense in terms of "lore", but Turbine is not that lucky (though it might not be a bad thing, considering...). They are not allowed to touch anything directly related to Hobbit or eg. 1st Age, being limited to LotR and some appendices - I guess folks can offer more insight here http://lotrocommunity.com/forum/topic/2340-the-long-story-short-of-the-tolkienwbzaentz-lawsuits/ (lawsuit and dishonest PR surrounding it), as for the extent of creative freedom Turbine has - you might want to dig deeper. Just keep in mind that official forums require high tolerance for BS, paid (or unpaid, there's a lot of idiots on this Earth) "thread augmenters" and CM team that behaves like an elephant with ADHD in a china store.
Outside of licensing/lawsuits/bugs etc, WB seems perfectly happy with Turbine trying their best to sell some half-arsed version of NGE (yeah, couldn't even manage THAT) with recent x-pack and trying to appeal to Mobile/Zynga/Game-wins-itself type of customers. At the same time they count that their loyal customers will remain loyal despite those changes, through Paizification process, which amounts to, roughly, "so what if they are unhappy, if they like the game they will stay even while bitching, so we can still screw them". Fernando and Kate Paiz, inventors of this approach @ LOTRO, have been truly awesome at treating their long-term fanbase as a retarded Wallet Operators during recent years. With its lowest common denominator in terms of "challenge" or "diversity" and with multiplayer component (as in: cooperative OR competitive tasks and combat rules) systematically abused, game has become more like a toy, Sims-in-Middle-Earth.
So "what on Earth are WB doing" with that particular piece of IP? Hopefully letting it die, as there can be no other LOTR MMO while this one still is around and occasionally pretends to be a game with a chunk of decent *and new* content here and there.