Lyra, I'm not sure Tolkien would have thought that there is a difference. Other than a few random comments, I'm not really qualified to answer, but--
Have you read lmp's thread,
It feels different near the Shire?
I wonder whether I would classify LOTR as an "epic fairy tale romance". Tolkien called it a "romance" in his letters (as in Epic romance?) while I think he thought of The Hobbit as a fairy tale. I should look it up. Do you have a copy of Tolkien's letters? And have you read "On Fairy Stories"?