The personal lantern is a feature that was discontinued soon after Moria launched back in 2008. Turbine did not want to expend the resources to allow the lantern to work all the time in Moria and at night everywhere else. The lantern was replaced with the Ambient Light slider.
Turbine never bothered to spend the resources to completely rip out the lantern feature. I am not sure if the Torch key mapping could ever be changed via the UI. You can change it yourself by manually editing the keymap file.
Look for this entry:
ADMIN_LIGHT [ Old [ 0 DIK_F10 ] 0x00000004 ]
change the mapping to whatever you want.
The file is located in My Documents/The Lord of the Rings Online
It is called lotro.keymap. Make a backup - a save copy before editing with a normal text editor like notepad.
The lantern works great in the launch regions. Starting with Moria and later its usefulness may be limited. Not being able to use the lantern in Moria when is up is a major annoyance. For me I found that visibility with the lantern in Moria was so low I kept going over edges and falling in pits.
Unless stated otherwise, all content in this post is My Personal Opinion.