This game introduced me to the book!
This game's story, while it doesn't exactly follow the book's plot (especially toward the end), stays pretty faithful while adding a bunch of side-quests and extra locations/characters/encounters. I would say that it manages to convey the feel of the books very well, starting out in a homely setting of the Shire and then moving to the darker, more forlorn places of Middle Earth.
The graphics are pretty decent for 1990, through today you may find them rather pixelated and clunky. I especially liked the character portraits. All of them were so detailed that they became in my mind the way the characters should look (and I actually compared them to the movie's cast. I think the game's Frodo is more fitting to the book's description than Elija Wood).
The interface is probably the game's one biggest shortcoming. Most of the actions are to be performed by hitting hotkeys, which are not immediately obvious from the screen. At some places you actually need to type things in (such as for conversations), and you may end up hunting for the right keyword to say to an NPC.
A lesser annoyance is the game's reliance of written passages from the manual whenever it needs to tell a sizable portion of the story. I guess wishing for these things to be presented in-game is too much to ask for, but make sure you have the manual in hard copy when you play so you don't have to quit the game to read a passage. Also there's more of a chance for spoilage if you go to a passage you weren't supposed to read.
The Bottom Line
Overall, I would recommend this game to anyone who has the patience for its interface. The progress is rather slow, much like in JRRT's book, but the settings and the quests are well crafted, and suit the source material. If you have the imagination to compensate for the low abilities of 1990 hardware, you will find this game does a pretty good job of transporting you into Middle Earth.