Well, Iarwain, which one of these describes your view on your life? The characters are people living in time, just the same.
I have always taken it that 'themes' or sort of general predestination, fate, is to occur in Middle-Earth and known vaguely by the Valar (Mandos and Manwe having a somewhat clearer view of it). Beyond the start of the Dominion of Men, again a 'theme' that it is known will happen, predestination is still governed by the Music of the Ainur; but the Valar do not know it.
If it was all strict, and the Valar had known exactly what would happen in the first three ages, how could they actually do anything? Make mistakes, like Melkor did? Surely, they would have knowledge of what was to come and would be able to avoid it. Therefore fate seems not to be absolute but more vague, as I say.
A world where free will exists, but in which it is known by God/Illuvatar that everything will be such a way, is imaginable though. Decisions could be made entirely ungoverned by fate, but still predestined -- not actually influenced but merely known that it 'will happen' of its own accord by fate. Rather an irritating thought, but there it is. This would be Illuvatar rather than the Valar though (if that was the way it was), in the mythology.
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