I don't think it really would have mattered when The Hobbit came out, it would have been successful. It just has that timeless quality about it, and it contains elements that never go out of style in a story. There's treasure, tricks, magic, adventure, action, and it contains a sense of wonder that many others don't. It introduced a new type of magical creature into modern mythology. I can't ever remember reading anything before that referenced a hobbit. Out of respect to Tolkien, and possibly because of legal action from his estate, books published after don't do more than mention hobbits. The kender in the Dragonlance books do remind me a little bit of them, but they're kind of like a cross between hobbits and gnomes that went wrong somewhere along the line.
I first read The Hobbit when I was a kid and it hit me with the sense of wonder one gets when they discover something truly original. I can remember it was one of those books I'd say to myself just another chapter and then I'll put it down, but that final chapter didn't come until I was almost finished the book. To just think of it as the prequel to The Lord of the Rings is to do it a great disservice.
It can be read and enjoyed entirely separately. I don't think you have to read the better known, more highly respected sequel at all. I always felt that they made the films backwards. The Hobbit should have come first (it may have meant that they didn't have to include needless parts of the story and put certain characters into a narrative that they never were in at first because they were played by stars), then The Lord of the Rings. If anyone has read The Lord of the Rings, whether they liked it or not, and not read The Hobbit, then they should redress that. If they haven't read The Lord of the Rings and have no intention of reading it, then still read The Hobbit and find out how a real fantasy adventure works.