Actually, from what I understand, it takes place during, and is based on, the movies. The main thing I'm worried about is the developer taking some creative liberty and making up a whole bunch of battles, which would appear so, since there's only 4 battles in Lord of the Rings. I really don't want them constricting themselves to
just LoTR, if they'd branch out into the First and Second Age (hell, even The Hobbit had a large battle at the end), they'd have a plethora of battles to depict.
Still, even if the game does completely screw around with the LotR story, I'm sure it's still going to be an incredibly fun RTS.
Also, there's another LotR RTS in the work, this one by Vivendi Universal (more specifically Liquid Entertainment), called War of the Ring. Looks like it's comingly along very nicely as well. Here's
Gamespot's preview.