[The Squatter of Amon Rûdh]

I still think you have a point about The Lord of the Rings, Heren; it's just that Tolkein made a lot of philological jokes in all his writing, and not just the piece we're discussing. It would be typical of Tolkien to give the hero of his first novel a name that could both mean 'a good sword' and 'a fetter', because Bilbo starts out his adventures as a burden on the Dwarves, but soon becomes as useful in a pinch as a well-made blade, eventually releasing them from the Elven-king's prison in a final ironic flourish.

That's heinously off-topic, so I'll return to something that's been kicked around above. Why Tolkien encloses the word 'parody' in quotation marks in the letter quoted by Bêthberry is anybody's guess. Perhaps he was unsure of what he wanted to say, or perhaps he meant to use 'parody' in some modern vernacular sense that he refused entirely to accept. I don't think that we can discount his use of it, though. Given the satirical use to which Tolkien puts hobbits, their status as a pastiche or a parody of rustic Midlanders is entirely plausible. Something doesn't cease to be a parody when it runs close to reality; quite the reverse in my opinion: the best parody never loses sight of the true nature of its subject.

If Tolkien did intend the Shire as a smaller or parodic version of rural England, though, it was an affectionate and nostalgic one. In that respect it's similar to P.G. Wodehouse's sketches of British upper-class life in the 1920s and '30s, which he continued to write long after that social world had gone the way of the Dodo. Tolkien had a strong sense of fun, which would be very likely to depict literal 'little Englanders' rising up to trouble the counsels of the great and the Wise. What The Hobbit began by putting a country gentleman in a legendary setting, The Lord of the Rings continues; although as we are already seeing the author takes the mythical element a lot more seriously in the later work.

As for the unwillingness of good to recognise evil that was mentioned above, I think that Tolkien is more depicting evil growing where one least expects it. Who is it that holds back the attack on Dol Guldur? Why, Saruman; as yet unrecognised as a traitor working for his own ends. Good in Tolkien's works is always divided and uncertain of itself, while evil is always self-assured and at least nominally united. The difference is that the alliances of evil are fatally flawed by selfish motives, whereas when the good and the wise form alliances they have the common good at heart, which gives them greater strength in adversity. Evil always creeps back in, each time attacking where good seems strongest, warping or perverting the greatest bastions of its opposition to serve its own ends. The 'good' side do not allow the existence of evil to make them leave off their trust and goodwill: essentially they refuse to oppose evil at the cost of becoming more like it, which is the hardest lesson of all and one of the major themes of The Lord of the Rings.