Yes, of course. I would hate for anyone to stop playing lotro over a naming issue.
That being said, the system we have now makes it so there is only 1 Bob in-game. Easy to keep track of. Yes, someone could make a Bab or a Bub but overall the system avoids confusion. On the other hand,
Scirocoo the Grey
Scirocco the Grey
Scirocco the Gray
Scircoco the Grey
Scirocco the Grey
Scirocoo the Gray
Scircoco the Grey
Scirocco the Grey
Scirooco the Grey
Scirooco the Grey
Scirocoo the Grey
Having a friend's list that looks like ^ this would be extremely confusing, wouldn't you agree? And while that exact scenario almost certainly wouldn't happen, there are other more common names - names that are fought over - where this could indeed be the case.