Hard to imagine! Even though the Elder Scrolls universe is rich in lore and seeped in history, it would be almost unfair to compare it to LotR, which is in a completely different ballpark. I don't think any fantasy literature out there can be compared to it, seeing as it was essentially the life's work of a man who set out to create a modern mythology for the English language, spanning decades of writing and never seeing full completion (even after many loose ends were tied up by his son, Christopher Tolkien).
An MMO set in Middle-earth, eh? I'm intrigued, though I usually stay well clear of MMOs. I did play WoW for a couple of months back in 2005, but then realized it wasn't worth spending that much time on, and haven't touched the game since.