In general, Middle Earth works as a campaign world with two types of big baddies: Either Melkor's lot (Melkor himself, leftover servants of him like Sauron, leftover minions of Sauron like the Witch King) or people who find powers that they are not supposed to have and get corrupted by them (like Saruman who, in the books, wasn't a minion of Sauron, but merely an ally with his own agenda).
Personally, I have done the "leftover minion of Melkor" thing already, so I'd probably try the other one - perhaps even set in the late Fourth Age, when people try to find old magic and no elves are left to ask.
As far as ideology of the enemy goes, fascism works much better for the evil boss, because it will make HIM the leader, while with any type of egalitarianism, things can get out of hand quickly, and a big bad leader wouldn't want that. Unless he's genuine about it, in which case he probably doesn't qualifiy as a bad guy.