“I am da Law”

[Legate of Amon Lanc]

Good point, TM! In this, I believe, Tolkien showed explicitely the misuse (or: "overuse") of laws to ill. I think the Shire was also a nice example, in minor, of how Saruman turned from intentions "for greater good" using wrong ways, to total destruction. I think this is also one of the options how "law" (later turning to unjust rule) is taken in Middle-Earth, so I think it's quite good for the topic to remember that.
This is what Saruman told to Gandalf before imprisoning him in Orthanc:

We can bide our time, we can keep our thoughts in our hearts, deploring maybe evils done by the way, but approving the high and ultimate purpose: Knowledge, Rule, Order; all the things that we have so far striven in vain to accomplish, hindered rather than helped by our weak or idle friends. There need not be, there would not be, any real change in our designs, only in our means."

This is why the Istari were not given the right to use their powers in open. This is why Valar didn't want to force the Elves to go to Aman (and as we know, they considered their first war as "fault"). This is why the evil, many times, was not punished (Gollum!) even though it should be, by the law. This is why the Ring should not be used by anyone: not by Gandalf, not by Galadriel, not by the Lords of Minas Tirith. Saruman, in the beginning, had good intentions in mind - Knowledge, Rule, Order (although at the moment he speaks about this in the book, his intentions were already different). But the Shire shows the end of the road of ill-used "law": the Shire was a nice place where there were almost no laws, but everything went just fine because of the people, so said, "had the law in themselves". As some of you said before, I couldn't imagine a Hobbit killing another one - and it is indeed said, by Frodo in the Scouring of the Shire:

No hobbit has ever killed another on purpose in the Shire, and it is not to begin now.

And this is not just about killing. You can see even from the behavior of the Hobbits in LotR (be it Frodo, Sam, Merry&Pippin or the others in the Shire, well maybe with a few exceptions - like the Sackville-Bagginses, which are said to be "corrupted by Saruman", but even though, not actually wicked like for example Bill Ferny) that these folks were all friendly, sensible, caring for others rather than just for themselves. As Gandalf says in the UT, Appendix to the "Quest of Erebor", concerning the Hobbit behavior during the Long Winter:

"And then there was the Shire-folk. I began to have a warm place in my heart for them in the Long Winter, which none of you can remember. They were very hard put to it then: one of the worst pinches they have been in, dying of cold, and starving in the dreadful dearth that followed. But that was the time to see their courage, and their pity one for another. It was by their pity as much as by their tough uncomplaining courage that they survived."

(emphasize by me)

So this is quite different taking of law. The Hobbits had no need of laws, and look what the laws did there - it ruined them. These laws were there where they were not needed, so that the freedom totally disappeared and the folks had nothing they could do - so instead of building, the destruction took place. So, we have the places where the law was needed and was not (the Orc, I think, are a nice example for this), but we can also see, how the nonlawful law turned out to be destructible - and in the end, the extreme is again Mordor.