You can copyright anything seemingly - a Yorkshire pub is currently being sued by KFC for calling its Christmas Day meal a 'family feast'...
I think what's being missed here is that this is a Game. It's not the books nor is it a film adaptation - it's a game, and a fully interactive one in which participants will create content and characters, plotlines and relationships. Presumably they can do more or less what they want within loose parameters, rather like in World of Warcrack - and such games are in a constant state of flux anyway, their interactivity means they alter by the second. So you have to wonder exactly what degree of 'authenticity' the game creators/admins are hoping to control
anyway!
As soon as the data is loaded onto computers it will take any control over content right out of the hands of Tolkien and Tolkien purists anyway - so what the problem is I fail to 'get'. Some clever spark will find a way to hack the game anyway and find a way to allow 'gay marriages' - hackers found ways to make The Sims 'adult' so no doubt they will be able to do it with this too.