The idea that some role-playing games out there are trying to be simulations is pretty much a straw man. I'm a fan of GURPS, which is often accused of trying to be a simulation, but it really isn't. It's just trying to be very detailed. In all cases, where the GM's judgment calls for an outcome different than what's in the rules, GURPS is all for the GM taking over. In fact, GURPS is one of the most modular RPGs out there, where you can replace almost any rule with GM fiat or just totally ignore it, and the rest of the rules just keep chugging along with no adjustments.
Really, the notion that the GM doesn't need to follow rules to make decisions, that the rules are only there to help the GM make decisions, is universal to RPGs.* The One Ring is no different. It presents its rules as the one true way to do things, but that's for the benefit of people who pick up the game without having played RPGs before. TOR has an especially non-symmetric split between player characters and non-player characters; that the Loremaster does not have to follow the strict procedures that players do is obvious from this setup.
* There are exceptions. For instance, the Rune RPG by Robin Laws is a competitive RPG played for points, and a winner is declared at the end of a game. The job of runner, what the game calls the GM, rotates among all the players during a game; each encounter of an adventure is run by a different runner. The runner is constrained by the rules, both in applying them during a game and in designing the encounter in the first place, which must be done according to a balanced system of encounter points. The runner cannot improvise any significant element of an encounter, though he is allowed to make decisions about things that aren't part of his encounter notes ("You want to climb a tree and shake snow onto the head of the troll? I didn't anticipate that. Okay, here's what happens..."), but players don't get victory points for stuff the runner has to improvise. It's a fascinating system and a lot of fun to compete while also working together. But in that game, ignoring or changing the rules without the consent of the entire group is actually cheating.
