He obviously didn't like to describe it as an allegory, but that doesn't mean that it isn't. In his own words:
"The Lord of the Rings is of course a fundamentally religious and Catholic work," wrote J.R.R. Tolkien about his masterwork, "unconsciously so at first, but consciously in the revision. That is why I have not put in, or have cut out, practically all references to anything like "religion", to cults or practices, in the Imaginary world. For the religious element is absorbed into the story and the symbolism"
http://www.catholiceducation.org/articles/arts/al0108.html
A Mythology for England
Although The Lord of the Rings and The Chronicles of Narnia represent the flowering of that agreement about mythopoeics, Tolkien and Lewis disagreed about their religious purposes, which explains why the literary styles they used to create Narnia and Middle-earth are so different.
Lewis, the evangelical Anglican, hoped his stories would bring the reader closer to the truth of the Christian Gospel. As a result, The Chronicles of Narnia bristles with obvious Christian symbolism, allegory, and moments of overt moral and religious instruction. In short, Lewis wanted his writing to be evangelistic.
For the Catholic Tolkien, however, it was more important that Middle-earth was successful as "sub-creation." Using his vast literary, linguistic, and historical talents, Tolkien created Middle-earth as an act of divine praise. The more convincing Middle-earth was as a real place, the purer that praise would be because it would more closely approach God’s own act of creation.
Unlike Lewis, Tolkien was unwilling to direct his fictive world according to any overt pedagogical design. He believed that the moment readers are made aware of any connections between our world and the "secondary world" of fiction, the literary spell is broken; readers reemerge from the imaginary world and realize that it is "just a story." Tolkien wanted them to believe that Middle-earth really exists and is not merely a tool for evangelism.
Few readers of The Lord of the Rings know that Tolkien hoped Middle-earth would become England’s native mythology. He thought that the Arthurian legends were weak compared with the Homeric epics and Norse legends. Middle-earth, with its inspirational heroics and warnings about the hazards of the will to power, was created to preserve a uniquely English cultural heritage from modernity’s infectious errors.
With this in mind, we can understand why Middle-earth seems to embrace magic and soft paganism. The historical framework for Tolkien’s imagination was England’s pre-Christian past—the scattered and disconnected Norse and Anglo-Saxon legends, with their tales of heroic valor and pagan mysticism. Tolkien purposely set Middle-earth before the advent of Christianity because he feared that it might otherwise lapse into a kind of enervated allegory.
http://www.crisismagazine.com/november2001/feature7.htmTolkien source materials.
http://www.sacred-texts.com/ring/index.htm
Faith and Fantasy: Tolkien the Catholic, The Lord of the Rings, and Peter Jackson’s Film Trilogy
By Steven D. Greydanus
J. R. R. Tolkien once described his epic masterpiece The Lord of the Rings as "a fundamentally religious and Catholic work." Yet nowhere in its pages is there any mention of religion, let alone of the Catholic Church, Christ, or even God. Tolkien’s hobbits have no religious practices or cult; of prayer, sacrifice, or corporate worship there is no sign.
To make matters more difficult, Tolkien was equally emphatic that The Lord of the Rings were not to be understood allegorically. In fact, Tolkien was famously hostile to allegory in general, disliking even the allegorical children’s stories of his friend and fellow Christian C. S. Lewis, The Chronicles of Narnia. How then can The Lord of the Rings be in any sense described as a fundamentally Catholic work, or even a religious one?
Creation and corruption in Middle-earth
Part of the answer is found in Tolkien’s other great chronicle of Middle-earth, The Silmarillion, which recounts the larger mythic context of Middle-earth, beginning (notwithstanding his antipathy for allegory) with a magnificent allegorical retelling of the Creation and the Fall according to Genesis 1-3.
Here Tolkien does name the creator-God of Middle-earth, Eru ("the One," also called Il�vatar, "All-Father"), as well as the mighty spirit Melkor, who rebelled against Eru and went into darkness. We also learn that Sauron, maker of the One Ring, is himself an agent of this Melkor. Tolkien thus establishes a direct relationship between the theistic, even Judeo-Christian cosmology of The Silmarillion and the war for the One Ring recounted in The Lord of the Rings.
http://www.decentfilms.com/sections/articles/2559