My mother read us The Hobbit when I was pretty young, and for years our Christmas present to her was The Brothers Hildebrandt's new Tolkien calendar. We used to have a four-hour drive to visit my grandparents, and we would sometimes amuse ourselves by reciting Tolkien songs and poems.

I didn't tackle the Silmarillion until later -- it's heavy going for a twelve-year-old! -- but when I eventually read it I was overwhelmed by the complexity of his mythology. It set the standard for fictional world-building for me, and few authors can match him in that respect (Frank Herbert, perhaps, with his intertwined politics, religion, and economics).

I mention Tolkien's "cauldron of story" often in discussions of fanfic. I think he would have approved of stories that add something new, but I think he might have been hard put to understand Gimli/Legolas slash ;)