This is a widely discussed topic among the greatest of Tolkien scholars. While I do not claim that status, I wish to pledge my allegiance in this debate, make my views clear, and perhaps someone will find a nugget of wisdom in this that can make a difference in the big fight.
As a true Tolkien fan, I state that the Middle-Earth legendarium is not an allegory, and contains no major allegorical references to any real-world or religious events. In the Foreword to the Second Edition of the Lord of the Rings, Tolkien states very clearly:
“As for any inner meaning or ‘message’, it has in the intention of the author none. It is neither allegorical nor topical. As the story grew it put down roots (into the past) and threw out unexpected branches: but its main theme was settled from the outset by the inevitable choice of the Ring as the link between it and The Hobbit. The crucial chapter, “The Shadow of the Past’, is one of the oldest parts of the tale. It was written long before the foreshadow of 1939 had yet become a threat of inevitable disaster, and from that point the story would have developed along essentially the same lines, if that disaster had been averted.”
In the same foreword, I found an intriguing quote:
“I think that many confuse ‘applicability’ with ‘allegory’; but the one resides in the freedom of the reader, and the other in the purposed domination of the author.”
While it is, in fact, the reader, that gives the story true meaning, that is not allegory, merely them applying it to their own lives.
This is a very quick review of where I stand, and eventually I plan on writing a several-page article on the idea as a whole and address some of the opposition’s arguments, but this should satisfy you for the time being