Without trying to optimise your list for what you've already described as your first, and a friendly game I see no glaring flaws which are going to cause you huge problems.
I think perhaps the banner is just one more thing to remember, but there's no harm in taking it if you think you'll remember your banner re-rolls. Otherwise you could drop it in favour of another Sentinel (if you have the model: i think they're the same points?) or a guard of the galadhrim court and Celeborn's elven blade.
All models in the game are considered to have a hand weapon unless the profile explicitly states that they are "unarmed". So you definitely don't need to give him an elven blade if you don't want to.
As far as tactics are concerned, against Mordor you're probably going to find yourself outnumbered, or against some big horrible monsters (or both!). Do whatever you can to shoot down mounted ring wraiths before they get to you, use Celeborn's immobilise if you can, and be free with his will if you're facing ring wraiths, as you'll probably find your opponent sapping your will.
Legolas is best out of combat, and shooting. Use his Might to manoeuvre with heroic marches if you find his war band in a useless position. Use his special rule to take out priority targets if they're particularly threatening, or just be happy to plink 3 shots a turn if your goal is to break the enemy.
By the look of your list you've already got a fair idea of tactics- support using spears to get those extra attacks. Try and meet the battle lines with your flanks protected by scenery to prevent your opponent outflanking you. If he has cavalry try to shoot the steeds out from under him before he gets to you. Remember you can use your Wood Elf spears to shield if you're in trouble or outnumbered in a fight- they can prove very useful for holding up the battle line while your superior heroes cut through his troops.
If your hero looks like he's going to win a fight consider using "heroic combat" so that you can get him in to a second bout of combat, and potentially help out with a tricky fight against a monster for example, or just charge multiple troops if, again, you're trying to break the enemy.
Generally, be aware of the win conditions AND the "game end" conditions, and take the time to consider them each turn. Plenty of people (myself included) have lost a game because the red mist descended, and they forgot to be mindful of the actual scenario conditions! Reducing your opponent to 25% of his starting strength is cool and all, but not if he's beating you on Victory Points!
Let us know how you got on. How about writing a battle report!?
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