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Well, I have a henchman army with 2 units of DCA/Crusadors. As we all know, the models available for DCA and Crusadors are expensive and only come in 2 poses, so I did not want to buy them. For my DCA I just made some witches and painted them appropriatly. For my crusadors, i shopped around the GW site, looking for cheep models with swords and shields. I considered the WHF warriors of chaos, but then at my flgs i managed to get a bunch of LOTR easterlings, who all have nice swords and shields. I painted them up in red and black, with some silver in certain places, put big red Inquisition seals on their shields, and called it a day. I have used them in friendly games and local tournys with no issue, but recently, I was planning on taking them to a tourny at a GW store, and someone told me that i would probably not be able to use LOTR minis in GW tournys. I don't understand. They are made by GW, so why wouldn't they be allowed in GW stores? Is this true?

It really depends on the TO and the tournament. Some TO's will say that is okay. Some TO's will have a big problem with it.

Best bet is to contact the TO and ask them.

70% GW product is acceptable for a model, according to GW.

And since they are completely GW made, should therefore be allowed.

There were some issues with using LOTR components in 40K or WHFB armies early on, as the licence agreement that GW had for LOTR forbade them from mixing LOTR with their own licenses, due to the original copyrights belonging to different people and neother party wanting to 'water down' their own property.

So conversions using LOTR parts, or armies using LOTR minis have been either banned from GW-run play, or not featured in event covereage (it's varied over time).

This policy seems to have been relaxed somewhat over the last couple of years though. Your best bet would be to just check with the store you're planning to play at,