Middle Earth suffers from the same problem of all literary fantasy settings (Wheel of Time and Dragonlance included)- there just isn't enough room for the PC's to do anything very interesting- they're completely overshadowed by the plot of the main stories.
Sure, you can go to an earlier or later era- but you can't create a greater enemy than Sauron or Melkor. You can't create a greater dragon than Glaurung or Smaug. If great and terrible events happen during the halcyon of the Second Age, it's not the same anymore. There just isn't really enough of a canvas to work with, when it comes down to it, without making it no longer really feel like Middle Earth. Which makes Middle Earth a great place to steal flavor and ideas from (and have I ever!)... but not such a great place to play.
Star Wars is different, because Star Wars is a vast universe to work with- a million worlds (so you can easily insert your own), 100,000 years of history, and only a few basic concepts that need to be hewed to to "keep it Star Wars"- Jedi, the Force, the Dark Side, spaceships, aliens. Done. You could set it 10,000 years before the movies and have the heroes perform feats undreamed of by the Jedi we saw in official materials- and it would still be Star Wars, and hardly touch canon.
Fantasy settings, bound to a much smaller canvas, aren't so malleable, without "losing the plot".
(This, too, is what killed Dragonlance for me. I always liked reading the modules and pilfering material from the setting- but actually play there? Check, please. The Forgotten Realms and Greyhawk, while they have some pretty epic novels connected to them, are much easier to play with. A big part of this is because, in general, your players probably haven't read them (and if they have, it's typically the Salvatore novels- Cadderly and Drizz't- which are minor enough not to have much impact on the setting itself. They're not world-shaking epics.).)
So I don't think there ever will be a really good Middle Earth RPG, and I don't think there can be.