How well does Turbine's Lord of the Rings Online work in an emulated Windows XP installation using VMWare Fusion, Parallels or other emulation systems?
In a VM it's completely unplayable. Think in terms of measuring framerate in seconds per frame, not the other way around.
HOWEVER... LotRO runs just fine on a Mac in Bootcamp. I played for well over a year on a 2.6 GHz MacBook Pro, running WinXP in Bootcamp. The downside is you have to reboot your machine into Windows instead of running it alongside OS X, but the upside is that any other Windows games will run just fine that way as well.
In general you're going to get mediocre performance when attempting to run GPU intensive games in a virtual machine. In most cases this will hurt the playability of the game and put you at a disadvantage when playing against others in a multiplayer environment. I would recommend against attempting any serious gaming in a VM.
That being said, a few VMs do support accelerated graphics. VMWare and VirtualBox come to mind. MS Virtual PC does not. I can't really comment on any other VMs. Since most VM software supports some form of rollback/undo disks, I would suggest trying it out on an undo disk. That way if it turns out to be unplayable its a simple matter to delete the undo disk and you haven't filled your VMs virtual disk with files.
Note: Using an undo disk has a slight performance impact as well. So once you've determined if the game is playable merge the undo disk back into the main virtual disk to get the best performance.