_Smaug_ in The Hobbit is not Icelandic. If the two forms are identical, it's a likely coincidence. Primitive Germanic means nothing but early Germanic; a largely assumed/derived language between the Indogermanic and later documented languages of Old High German, Gothic, etc. It's assumed because there are no surviving written or oral documents of it. Arguing (historic) linguistics with Tolkien is very, very thin ice.
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