Gforce 7600gs vs intel hd graphics

I think someone else could answer this more definitively than I, however it would certainly appear LOTRO has minimal requirements and a 7600GS could handle the game easily.
I think the core i5 integrated graphics could handle the game as well, but I don't know as far as settings go how great your experience would be. A dedicated graphics card is still preferred for gaming, not sharing system memory and other resources.

I believe you'll do better with the video card installed. You can save up for a new card in the meantime. Probably an HD 5670 at the minimum or best bang for buck would be the HD6850 or GTX 460 1GB.