The DnD idea sounds great! I've always been interested in the whole Dungeons and Dragons thing but never got the chance to play it with anyone, though I have read a bit about the dice system.

And yeah, having NPCs would be nice to flesh things out more fully, though I'm not very good at doing NPCs unfortunately Hopefully it's something I'll be able to do okay once we start.

And totally yes in regards to the whole LOTR-fantasy type setting along with the differences in various cities

For the races I'm thinking just about anything goes, whether it be halfings, orcs, mixed races, or whatever, though I'm not sure if there should be segregation between the races...maybe some places are mixed, some aren't, and some races are especially shunned, etc.?