Just like television contracts....
Ever got annoyed at your cable/satellite operator because they dropped a TV station you like because the carrier and TV station owner couldn't agree to terms?
This is more or less the same. These kinds of contracts are usually not negotiated until the very last minute, so we probably won't hear much about it until the last quarter of 2014, and even then we may not hear anything until Decemeber 31st.
Lotro is a huge cash cow for Turbine, it is one of the best F2P MMO's out there, and the Turbine point system generates a lot of money from subscribers and F2P players alike.
In the end it comes down to money. If in 2014 they make MORE money then what it would cost to renew the contract + all other operating/business expenses, ergo: they make a profit, then you'll see the contract renewed. If at that time the amount of subscribers have dropped substantially, they may re-assess the validity of Lotro from a financial point of view. This is exactly why a contract was made with a 3-year extension, it will all depend how many active players there still are by the end of 2014.
Obviously, by 2014 they will have the entire storyline, and we'll all get to be level 100 or so.... bigger question then is what kind of content will we see after that? Could they branch out beyond the original story line and do new things? There are no written Tolkien stories after the Return of the King after all.
I also feel that level 100 is probably the max any MMO should strive to have, after that you can release content packs and change the game by introducing new races and classes, but there is really no point in leveling beyond a level 100.