The issue of allegory vs. application comes right back to the central theme of this discussion. I can't say it better than Tolkien himself did in his foreword to LotR:
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...the one resides in the freedom of the reader, and the other in the purposed domination of the author.
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That's it precisely - no reader can tell the author whether or not his work is an allegory, for an allegory is written purposefully; that decision is made by the author in the process of writing. If the author says it is or isn't an allegory, then we must accept his word for it.* However, neither can the author tell the reader that he may not apply aspects of his work to whatever he chooses, as application is an individual choice of the individual reader. This is where the interactive aspect comes in - each reader will apply different things to her/himself and her/his worldview, and that may well change during the course of a reader's lifetime/repeated re-readings.
*In the case that we do not have a definitive statement by the author as to whether his work is allegorical or not, there should be enough evidence made obvious in the work itself to prove a claim one way or the other. Otherwise, it remains ambiguous and any discussion thereof is speculative in nature.
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'Mercy!' cried Gandalf. 'If the giving of information is to be the cure of your inquisitiveness, I shall spend all the rest of my days in answering you. What more do you want to know?' 'The whole history of Middle-earth..
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