I read The Hobbit for the first time in high school and the Ring trilogy shortly thereafter,including the appendixes. I've read them several times since then. I've attempted the Silmarillon several times, but never gotten the whole way through.
The Hobbit is a wonderful book to read to your kids, although I found Tolkien's sentence structure to be awkward for "aloud" reading. I had never noticed it when I was just reading it to myself.
I read it to my kids a couple of years ago, when the movies were starting to come out and my son was hooked. He is now 11 and has read them at least three times, and more of the Silmarillon than I ever did. He has also read several biographies of Tolkien.
I enjoyed the movies, but kept saying "That wasn't in the book". Most of the changes I understood were for brevity, but I will never forgive Peter Jackson for leaving out Tom Bombadil.
I really enjoyed the soundtrack, especially from the Fellowship, and have the first two on cd.