The team has decided to stop development of the mod. We simply don't have the resources to go against this, and hiding in anonymity wouldn't work because due to the great ambitions MERP needs publicity to sustain the life force of the team. We had hoped that since Third Age - Total War never received a C&D we would have a chance to dodge that bullet as well, but apparently an RPG is a bigger threat to Warner Bros than an RTS like Total War.
Changing all copyrighted content is not an option for us, once all the names and such are different it wouldn't feel like LotR anymore.
We're not sure yet what the future will bring, but as for myself, I don't plan to stop modding Skyrim. This time not on projects that risk receiving a C&D though.