A couple of things that really bug me about LoTR, not necessarily graphics but graphic related. One, why is almost every npc standing around outside their houses? Is there some flaw in the engine that they can't do building interiors without instancing them? Second, I don't remember anything in the lore about the humans and elves camping in ruins all the time. I thought Celendim was supposed to be a capitol city for the elves. Why are all the people there living in tents pitched in some old ruin?
I like this. It always felt both bizarre and alien that you had to run around, kicking in peoples doors and barging into their homes. LOTRO takes the action outside to the yard or front stoops.
The problem with the North, lore wise, is it's supposed to be fairly barren and uninhabited. With the present zones available, most of the inhabited areas aren't available yet (Lindon, Iron Hills, Lonely Mountain area, Blue Mountains, etc). To be faithful to the lore, but establish the vendor presence, they made most of the settlements into camps and what not.