Creo discovered the option for launching from the same folder, you just add -usetdm to the parameters by editing the Game Configuration in Inner Space, and of course you cant be using the turbine download manager.

I guess the option I was mentioning before about the launcher closing isn't exactly worded like I said. In the options screen in the LOTRO launcher, under Updates you need to make sure that "Retrieve updates automatically" is unchecked, and under Advanced you need to make sure "Show the launcher in the system tray" is unchecked.