Jazlotus, the combination is perfectly legal and was a useful bargaining chip for me when I was explaining to some Evil players how they needed to exercise a little restraint themselves with loopholes.
Overall though, balance-wise the game is very good aside from a few things. I've seen people single out a few issues with SBG and I've seen the odd thing ruled out of WHFB comps too so glass-houses and all that. However, while I haven't played SBG (though I've often seen all those individual figs ranked up and wondered why not have movement trays...and anyway SBG is no comparison to a WOTR scale game) I have played WHFB (the current one) and my biggest concern with it is not balance (which seems fine), it is that it struggles to be considered a fully developed wargame. Too pre-programmed in terms of combos and stats and not enough happening on the tabletop. Trying some of the Ancients/Historicals games out there is not a bad suggestion though. I've played FOW for years and Impetvs is a great Ancients game. Scott Bowman swears by Hail Caesar too and both Impetvs and Hail Caesar have LOTR mods. Or, if you are a perfectionist, you could houserule but I think a little basic self-respect in terms of backing yourself to succeed without having to exploit something goes a long way.
To be honest, many of the issues I see people having with things in WOTR are due to lack of rules knowledge and actual sustained experience with the game amongst a group with some diversity in it. Sure some units don't work and you have to work very hard vs certain lists (Morranans + Wraiths, I'm looking at you. I wont even bother to play against a stacked Gorgoroth horde) but outcomes are largely down to how well you play the units on the table-top. Instead most of the online discussion I see is about pre-programmed combos and heroes, which I take to be a bit of a Warhammer mentality holding back people from getting how WOTR works.
YMMV