We could start at either the beginning of the War of the Jewels, somewhere between the landing of Feanor and Fingolfin to the Glorious Battle,
or
We could start at the beginning of the Siege of Angband, which lasted 400 to 500 years.
Both starts would be Year 60 of the Years of the Sun.
Other suggestions are welcome.
My first immediate thoughts on Morgoth would be that he would be played by a hand-selected trustworthy non-mod player. If no one would like to be the Vala Melkor, which would surprise me, we would have to come up with a special NPC mechanic for him. Obviously, Morgoth would have all kinds of mechanics by himself either way; theoretically, we want him to survive until the game dies, so he has to be all powerful and uber.
Players otherwise:
Players can play characters from lore, such as the famous sons of Finwe, or the from houses of the Edain.
They can also create characters, but would be restricted to starting from lowly origins in order to explain obscurity.
The higher the position, such as High King of Doriath, the more restrictions on who will be allowed to play them.
Players would play individual main characters rather than whole houses, as one player might want to play Fingolfin while another would like to be his son Turgon.
However, on death, a player may choose one of his heirs as his new main character, provided that character isn't already being used.
If playing a character from lore, players would be expected to RP in a way that is friendly to the way they behaved in Tolkien's writings.
IE, although Turin Turambar wouldn't be expected to become a cursed suicide, he would be expected to have his personality still.
.... I think that's all I thought of so far....
Oh, and the Silmarils are the goal. It's not so much "I'm fighting you because I'm good and you're evil", and more "You have the pretty jewels and I think they're mine".