CD, you might find this additional context—from Torah Musings, a self-described “window into the Orthodox Jewish intellectual’s world”— of interest (added emphasis mine):

Tolkien and the Jews

With the release of the first installment of Peter Jackson’s The Hobbit film trilogy, diehard Middle Earth fans and movie-goers worldwide are reveling in the experience of entering J.R.R. Tolkien’s fully realized world, despite the critical panning the movie has received. Ever curious if Hobbits are good for the Jews, writers have been examining the canon of Tolkien’s work with Talmudic precision for Jewish connections - to clarify some mistaken or imprecise reporting we present or revisit some of the interesting Jewish connections in Tolkien’s Middle Earth and in the stories behind it…

[…]

In a 1971 BBC interview (available on YouTube), Tolkien suggested that the race of dwarves who populate his mythology “of course are quite obviously - wouldn’t you say that in many ways they remind you of the Jews?” Tolkien was by trade a linguist and philologist, and created languages for each of his fictional races. “Their words are Semitic, obviously, constructed to be Semitic,” he said of the Dwarvish tongue. Of course, the dwarves have a great love of gold, and some have drawn attention to a possible anti-Semitic sentiment here. “I do think of the ‘Dwarves’ like Jews,” he writes (Letters, p. 229), “at once native and alien in their habitations, speaking the languages of the country, but with an accent due to their own private tongue.” In The Silmarillion (Tolkien’s collection of background legend to the world he created), chapter 2 tells of the creation of the Dwarves, which tells a founding myth not too removed from the story of Akeidat Yitzhak (Abraham’s binding of, and near slaughter, of Isaac), and the notion that while born first the race of Dwarves was superseded by the race of Elves (perhaps a hint to the status of Jews vis—vis God within the Christian worldview). The screenwriters of the new Hobbit film, highlighting the Dwarvish Diaspora, how they were exiled from the ancestral home and questing to return, put a speech in the mouth of “gentile” Bilbo Baggins worthy of Mickey Marcus and “Cast a Giant Shadow”. The scene doesn’t exist in the book, but the hobbit declares his loyalty to his companions and their nationalist hopes for return - Zionism Middle Earth style. […]

http://torahmusings.com/2013/01/tolkien-and-the-jews/

I was surprised to learn that the first translation of The Hobbit into Hebrew was was done by four Israeli Air Force pilots who were POWs in Egypt in the early 1970s. You should read the whole article.

Oh, BTW, here’s the audio of the 1971 BBC interview (the part referenced in the article starts around 6:06):

Tolkien Interview

From the transcript of the interview at the Tolkien Library:

D. Gerrolt: Did you intend in Lord of the Rings that certain races should embody certain principles: the elves wisdom, the dwarves craftsmanship, men husbandry and battle and so forth?

J.R.R. Tolkien: I didn’t intend it. But when you’ve got these people on your hands, you’ve got to make them different haven’t you? Well of course, as we all know, ultimately we’ve only got humanity to work with. It’s only clay we’ve got. We should all … or at least a large part of the human race … would like to have greater power of mind, greater power of art by which I mean, that the gap between the conception and the power of execution should be shortened, and we should, like a longer time if not indefinite time in which to go on knowing more and making more.
Therefore we make the Elves immortal in a sense. I had to use immortal, I didn’t mean that they were eternally immortal, merely that they are very longeval and their longevity probably lasts as long as the inhabitability of the Earth.
The dwarves of course are quite obviously, couldn’t you say that in many ways they remind you of the Jews? Their words are Semitic obviously, constructed to be Semitic. Hobbits are just rustic English people, made small in size because it reflects (in general) the small reach of their imagination—not the small reach of their courage or latent power.

http://www.tolkienlibrary.com/press/804-Tolkien-1971-BBC-Interview.php

Based on Tolkien’s own responses above, I’d hesitate to read too much into his portrayals of the “races” as his point seems to me to be a much more broad one about the human condition and struggles—i.e. the dwarves, while having Jewish characteristics, are representative of any diaspora longing for a homeland, and their being identifiably different or “other” based on their language (and its associated religion) can be representative of any immigrant. It’s artistic license, not a literal blanket statement about the good or bad qualities of any specific ethnic group(s), though perhaps some would prefer it to be.

Anyways, thanks for posting about this as I learned something from it.