The RPG elements, such as they are, contain:
There are dialog trees for NPCs you can talk to in various locations. So far I have been to Bree, Rivendell, and the Rangers' camp in the Shire. There are several characters, both familar, canon and not. There are no moral choices or anything like that. In that sense the PCs are pre-defined, which I think is ok considering the universe. From what I have seen so far, it is basically a way to get information about the world and characters, and get quests.
But there is a lot of detailed info about places and people from the Tolkien mythology, which I enjoyed. One moment that I really liked was that you can ask Gandalf why the eagles don't just fly the Ring to Mount Doom, and he basically explains in detail why that idea wouldn't work and is stupid.
There isn't really much in terms of personal story, but you can progress them in terms of stats, which in turn affects damage potential and things like that. And there are skills that are specific to each character, and cover ranged weapons, melee weapons, and special abilities. They leave a lot of freedom to how you progress them, and you can put multiple points into the same skill to improve it, or spend fewer points in each skill and progress up the tree. As a result you can get completely differently functioning characters, i.e. a Ranger that is totally melee or ranged, or a mix. You can also change their appearance by mixing faces, hair, beards, and so on.
There are loads of weapons and armour of all types, with a fairly large set of stats. So far for me some of the armour uses the same model, but I think all the models look great and very LotR-esque. Armour also has various pieces and can be mixed and matched, like shoulder guards, boots, gauntlets, and the like. You can have two-handed weapons, one-handed, shields, and dual wield. There are also gems that can be applied to some items to give them extra abilities. Basically, most of the progression is based on the gear side.