The MCE I attached in the very first post is the version I am talking about. The problem arises when I use the original MCE _without_ the changes you recommended.
1. Load that first original MCE, unmodified.
2. Run LotRO, and log in to a character.
3. Ensure that you're running in full-screen, with one monitor, to check that it's not a windowed-mode-only or dual-monitor-only issue.
3. Walk around a bit and steer the character/turn the camera using the top trigger on the right controller (entering freelook mode), then release the view.
4. Try to move the mouse around _without_ pressing the re-center view button
5. If you can still move the mouse around the entire screen without problems, try repeating steps 3-4 a few times (5-10 times should definitely reproduce the problem, in my experience).
6. You should find that sometimes the mouse can no longer move around the entire screen and you need to press the recenter mouse button to get it freed up again.
Hope that's enough to reproduce it. Let me know if it doesn't reproduce for you. Sorry to keep bothering you about this! The main reason I am still asking about this is that when I switch to absolute mouse positioning, it seems to make the bottom right trigger (which moves just the camera, not turning the player, and doesn't enter freelook mode) super-sensitive - moving the controller at all while holding it rotates the view a huge amount.