I never liked the way the 'Vancean' magic system was portrayed in D&D and I still don't like it. It easily takes the mystique away from magic unless the player is very good at describing his/her magic to the others. But the same goes with Rolemaster. Luckily I have had luck with my players, for example one ranger was able to describe all his spells as requests to Oromë and performed some small rituals the system didn't require to liven up the spellcasting.
In my opinion, you cannot very well create a generic magic system and generic races and apply them to any fantasy setting, because the demands of the world are always different. What ICE did especially well in their MERP books was adapting and creating believable races and cultures for Middle-earth and then making them work really nice with the rules, that is, starting from the specific game world. The freedom with character creation but compatibility with Middle-earth had a huge effect on me. I'm still running RM campaigns set in Middle-earth.
Seeing D&D races coming closer to Middle-earth races is kind of completing the circle. Tolkien took a lot of influence from celtic and german myths to Middle-earth and D&D was heavily influenced by LotR and the older fantasy works Alan mentioned, but in a way made a 'generic' fantasy setting out of them and started influencing itself and other new fantasy literature. And now they are again moving closer to one of the original influences.
-- Pasi (who's having too much time in his hands to ramble so long...
)