In this way lotro is a victim of its own IP license. You can't really have hobbits fighting other hobbits to the death, it would make the richest part of the game (the lore) silly. And from what I understand the design is tightly controlled; Turbine can't just jump in and start adding all kinds of crazy fantasy things like what you see in other MMO's. And being something of a Tolkien fan I can appreciate that, even if it restricts the gameplay and art styles a little too much for my taste.
You cannot tell me that in the entire world that Lord of the Rings takes place that no man or no hobbit ever raised a hand against another. Of course they did. It's called life. People have arguments and one thing leads to another.