As the previous post suggests, we do a lot of reading aloud in our house even though both children like to read on the own. My daughter may be 11-going-on-17, but if you are wise, you won't mess with her bedtime reading, and my son likewise thinks it doesn't matter what else has gone on that night, where we've gone or how tired he is: if he doesn't get reading, something is wrong. I hope we can hold on to this family tradition as they continue to grow up.
A while back I published a piece in the journal Silver Leaves about reading The Lord of the Rings aloud to a four-year-old. That was my daughter, and we read the books again when she was six. Since then she's wanted to read other things (unlike me, who would force my father to start right in again on The Hobbit as soon as we got to the end of Return of the King), and we've done a lot of fantasy and science fiction. Over the past two years we've read Susan Cooper's The Dark is Rising; Ursula Le Guin's Earthsea books (just the original trilogy. I'm not reading Tehanu to my daughter, well, ever); the Anne McCaffrey Harper Hall dragonrider books; the Lloyd Alexander Chronicles of Prydain (she loved these more than anything else); some of the Heinlein "juveniles"; and the first two Hitchhiker's Guide books by Douglas Adams.
My son wasn't interested in The Lord of the Rings books when he was four, though he did like The Hobbit and we read it a couple of times, but last year, after he turned seven, we started on Fellowship and are now to the very end of The Two Towers.
So I've read Tolkien's work aloud two and a half times, plus probably four times for The Hobbit, and have a pretty good comparison group of other writers. Tolkien is by far, massively by far, the easiest of the major fantasy and SF authors to read aloud and the one whose work gains the most from oral presentation (Lloyd Alexander would probably be a fairly distant second).
Now that's the kind of evaluative statement that needs something to back it up. But one of the problems with trying to defend such an evaluation is that we have no agreed-upon metric, and so people end up quoting particular passages, pointing, and saying "See! See how great that is!" But often passages that are great out loud are also great when read silently, so the argument is hard to make in detail.
I think, though, that I've come across one minor technique in Tolkien that really makes a difference, and I think this aspect of his work arises from his having read so much of The Lord of the Rings to the Inklings: you never, when reading Tolkien, are in any doubt about who is talking in dialogue. There is always some kind of information, either in the set-up, the dialogue itself or the description, so that you never have the experience of reading a block of text and then realizing "Wait! That's Eomer talking, not Gandalf."
In contrast we might look at Frank Herbert's Dune. I just finished reading this out loud to my daughter, and almost every night there would be some large passage of dialogue that I'd start reading, thinking it was one character, and then, after it was finished, you'd get a bit of description or a "said X" that showed that it was an entirely different character speaking.
I'm particularly sensitive to this because I do "voices" for most of the characters in a text, and so when you start a passage thinking that it's in Gurney Hallek's accent, and it turns out to be Duke Leto or Stilgar, you have to go back and re-read the whole thing in the correct accent. Many of these passages in Dune are too long to scan to the end and find out who is speaking without losing focus on the part being read and drifting.
But this disorientation never happens in Tolkien, even in minor works like Farmer Giles. It's always easy to read his texts aloud, not only because you know who is talking, but because the writing--even the description of landscape--has a rhythm to it, and rise and fall that keeps you from having to stay at one pitch and speed all the time. There are rushing passages, but then also slower, more graceful ones.
Perhaps this orality (both in terms of oral roots and ease of oral presentation) is another aspect of Tolkien's work that makes it appealing to such a wide range of readers and draws people back to re-read the books over the courses of their lives.