They closed down the MERP mod because it was for Skyrim, not because it was LOTR. Skyrim is a competitor compared to the games they have made, that's why they wanted to stop it, basically the mod would be better than their products and therefore it would be a loss for them.
This however is like nothing they have made so far and no one is earning any money on it, therefore wouldn't they risk a single penny to sue me. It would basically cost them money to stop me. Also there is already a few free online games, and none of them got permission to make the game and nor have they been sued.