I've got just a few other things to add to GroovyOne's post. (edit: looks like more than a few! :P)
A lot of smaller games use less experienced composers, or composers who are very traditional and studied orchestral composition at a school.
I agree but many larger projects also use composers who are very traditional and have studied orchestral composition. I know several large names who work on both large and small projects and had an interesting discussion with one triple A composer who said the fact that he's worked on major games makes it harder to land those smaller, indie jobs because the client assumes he's too expensive. Now with more and more film composers coming over to games (and vice versa) it seems composers are going to where ever the work is.
Unfortunately with the rise of personal orchestral sample libraries at affordable prices many people try to emulate movie soundtracks while completely ignoring that heavy stylized music can also be used.
Again, I've seen plenty of indie games going with either fusions, retro (chip tunes) or very unusual paths for their music. When talking about fantasy RPG it's normal for a portion to emulate LOTR and such but I think you're over generalizing here. A great example would be Tug. Looking at the artwork I expected to hear a certain sound but I didn't. It was refreshing.
I've worked on an MMORPG for the past 5 years where I directed the composer to write something that didn't sound 'traditional'. I planned out the musical palette, the style, and the way the music was implemented in game. We also spent a lot of time and energy making the music quite unique for all the different game elements as well as fitting with the background sounds.
Cool!
It also depends on the experience of the developer / producer and what they expect the game to sound like. Without a audio director guiding the process, many games can fall into the music trap of 'make my game sound big like a movie score' without considering 'make my game sound unique' because the person directing the sound just doesn't understand the possibilities.
When it's just the music/sound guy then he has to become both audio director and composer. You're right though, it's always a tricky balance between delivering what the client wants and assisting them in getting the best direction for their soundtrack.
I typically try to avoid cliche orchestral scores when I write for games. If I have to write orchestral music I steer towards a more stylized sound.
I hear ya. But I think some can take "avoiding cliche" too far. When we all get down to it, there are common, basic themes that resonate with mankind. This is why many of the stories we tell (be it books, films, games, etc) all have many of the same common threads. Likewise much of the greatest music shares common elements. My point is our goal is to support the story and create emotions within the player(s). Sometimes that's best achieved with music that is accessible to a large audience. It reminds me of a discussion with an audio director who was so proud of his generative music system. He made a huge point about it and how it never sounded the same. I appreciated the tech and efforts for sure... but I left the 45 minute meeting not being able to hum a single "theme" from the game. That's bad. In my opinion, he was too focused on not being cliche that he forgot to ensure some kind of melodic content stayed with the player. That it made an emotional connection - which it clearly didn't.
It all comes back to why styles like serialism didn't take off. I can understand and appreciate it as someone with two degrees in music but the average joe most likely won't. Heck... when driving or jogging I don't usually pick serialism but something else. I'm being long winded but it's always important to realize that our soundtracks are just one part of a much larger puzzle. If what we're providing misses the mark and doesn't create the intended emotional responses of the player, then we haven't done our job. 
