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For younger children (8+) and those unfamiliar with Tolkien's works, I always recommend starting out with this beautiful illustrated edition of The Hobbit. The Hobbit follows a much quicker, easy to follow pace when compared to The Lord of the Rings, and this illustrated edition is helpful for keeping little ones interested in the story as you read.
John Ronald's Dragons is also a wonderful illustrated biography of JRR Tolkien written for much younger children. Both of my children (aged 4 & nearly 2) love it! This is a great place for getting the very littlest of hobbits interested in the world of Middle-Earth. I wrote a full review of the book, including more photos, here.