Rules-wise? I feel the Hobbit book brings a lot more good than bad, even if it was by a different dude iirc.

-The hand-weapon stuff is not necessarily terrible... it just is a little clumsy and definitely optional. The extra die can easily be incorporated with a different colour die. (IE: If I win the fight, the secondary die colour represents the increase of strength on my Dwarf) All the units' models are taken strictly from what the movies depicted and the movies depicted swords on Isengard and Moria. So it just so happens that Moria likes this update and Isengard is disappointed.
However, you are allowed to convert your models freely to represent different hand-weapons. My hobbit party is chock full of shiriff-clubs, knives, lumber axes, and sledgehammers to give the little guys an edge. My Mordor Battle Company was converted with mostly hammers and axes on Orcs and Uruk-hai (respectively). Some call it power-gaming, others call it incorporating changes. It is a matter of "are you giving warriors of minas tirith all axes or are you at least keeping it close to the commonly-accepted lore?".

-The bow penalty to moving is pretty nice when thinking of woses, elves, etc. It really diverts the game from a gunline-and-kite--only stance in a good way but it does stink to be orcs. Where I put my foot down is with throwing weapons. They should NOT have a penalty for moving!

-Monster strikes are pretty necessary for bringing monsters back in the game. Before you could feed one model and tie up 80+ points for infinite time and a fraction of the cost. Though, I am debating house-ruling the monster "Hurl" to rely on a 40k scatter die for determining where it is thrown. That ability can HURT, yet it can be avoided with careful thought.

-Army building restrictions feel pretty okay. A need for 1 hero per 0-12 warriors is good for keeping the infinite goblin armies from being a terror. My complaint is that it forces a lot of Might into the game. ( I do not think I like might except on epic heroes)

-Magic, is cool I guess. Still feels good, so can't complain.

-In the Way is absolutely garbage, for one reason. It is not worded correctly. A foot being covered by a piece of dust obscures the target and thus the model gets an in-the-way. So we made a house rule where cover must be 25% (or just plain reasonable) and below-the-knees doesn't count. Knees especially so that darn Dragons can't get a billion in-the-ways from a horde of goblins.