QUOTE(Gop @ May 10 2007, 08:44 AM)

They are very anal lately. You can't even have conversions using LoTR bitz as it contravenes some rule, even though they sell the damn game!

There is a very long and winding reason why this misconception continues to flourish...
and that's mainly by people within the organisation refering to directions or directives that no longer exist...
The main source of confusion comes in that Golden Deamon has specific entry conditions which prohibit entries into the competition from mixing Lord of the Rings parts with Warhammer or Warhammer 40,000 miniatures in any and all of the categories.
As models could potentially be photographed and may appear in White Dwarf or the GW Website it could be seen as a breach of licencing to show figures which mix the backgrounds.
However, Grand Tournament is not Golden Deamon, so different rules apply!
If you read the Players packs for this year's Grand Tournaments regarding restrictions on what you can include as far as models (page 3 addresses the issue):
Non-Citadel miniatures are not permitted
in the tournament and will be removed
in the same way as unpainted miniatures.
The Army must be WYSIWYG, or ‘what
you see is what you get’. This means that
weapons, armour options and upgrades
chosen from the army list must be shown
on characters and on the majority of the
models in a unit or squad.
Conversions must begin as Citadel
miniatures and contain a majority of Citadel
components. All other models will be
removed from the table. They must be of
the appropriate type for the troops they represent
or comply with the Counts’ as rule
(see Appendix II).
No where in the Players pack does it suggest or imply that Lord of the Rings Parts can't be used on a players models as part of a conversion.
You may find that there may be difficulty getting photographs of your army in a White Dwarf Article if loads of parts are sourced from LOTR models and it's meant to be Warhammer or 40K!
So Rules as written - do what you want, cut and convert what you want, it may not appear in White Dwarf or on the GW Website...as long as it meets the rules in the Players Pack (have a look at the counts as rule which may apply to extensive or dramatic conversions) then it is OK to field at this year's Grand Tournament.
If someone challenges you on it...show them the rules pack and ask them to show you where it says you can't.
Good Luck.