[davem]

Originally Posted by LMP

But that's not my main point in bringing up the quote: Valinor is called Faerie!

We have to remember that TH was not intended to be part of the Legendarium, & Tolkien merely made use of certain elements from it. Quite possibly he was using them merely to give background to the story, without intending them to be analysed so deeply. Of course, TH wasn't the only story in which he did this.
There's an interesting note to the text of Roverandom:

the shadowy seas ... and the light of Faery upon the waves
The earliest text has: It was the whale who took them to the Bay of Fairyland beyond the Magic Isles, & they saw far off in the West the Shores of Fairyland.#, & the Mountains of the Last Land & the Light of Fairyland upon the waves.' I Tolkien's mythology the Shadowy Seas & the Magic Isles hide & guard Aman (Elvenhome, & the home of the Valar or Gods) from the rest of the world.

The final text continues:

Roverandom thought he caught a glimpse of the city of the Elves on the green hill beneath the mountains, a glint of white far away; but Uin (the great whale of the story) dived again so suddenly that he could not be sure. If he was right, he is one of the few creaures, on two legs or four, who can walk about our own lands & say that they have glimpsed that other land, however far away.
'I should catch it, if this was found out!' said Uin. Noone from the Outer Lands is supposed ever to come here; & few ever do now. Mum's the word!'

While TH did get taken up into the Legendarium, Roverandom did not, & Smith, I believe, was not meant to be included either. Having said that, I think it would be easier to include Roverandom in the mythology then it would Smith - after all the mentions of Fairyland/'Valinor' & its geography in that work are more explicit than in Smith (or even in TH come to that). Of course, if we did include Roverandom then it would make it a bit easier to explain the talking animals in TH & LotR!