At my school at least, assessments are always allowed to be within 10% of the word limit (as in, 10% under the minimum or 10% over the maximum) before marks start getting deducted. That seems kinda stupid to me - why not just make the word limit an extra 10% either way and then don't allow any leeway, but whatever, those're the rules (I also don't get the point of mimimum word limits either - if you can't get up to the word limit you've either written extremely succinctly, or you've missed stuff, and either way the extra words are going to be just padding, but whatever.).
I think the problem with word limits in the mw's is that while a work may seem long, there's the possibility that it's still within the limit (depending on how the work's written), and so the marker would have to count every single word (or scan every page into a computer and get the computer to do a word count), which would take a very long time. Maybe students should have to state their word count in their rs or something, so the bos can cut out the leeway.
Anyway, the point of this way too long post is that leeway in word limits sucks.
And one last thing, and I'm not too sure if this makes me a geek or whatever, but how can EE2 students think that Lord of the Rings is a bad book? That's like saying that Shakespeare was a hack.