Many years ago I lived in Iceland. I went to the university my junior year of college, and then worked on a sheep farm for the summer. I have pictures and should scan them before they fade away (cheap 110 camera film doesn’t last that long, although I updated to a 35mm later on).
But while waiting for that to happen, here’s this:
Notice the resemblance to Mount Doom in Mordor. This isn’t too far-fetched, since Tolkien visited Iceland before writing The Hobbit and The Lord of the Rings, and the country has been volcanically active for its entire history.
“You said you wanted to go to an island! See volcanoes!”
“I meant Hawaii!”)
Anyway, the dwarves are out of the Icelandic sagas, pretty much name for name. Mirkwood is based on Thorsmork, or Thor’s Forest. The name Smaug comes from the Icelandic for smaugur, which means to wind or twist. (In the Icelandic translation of The Hobbit, it’s disappointing that Smaug is renamed Smakir — not sure what the decision was on that one.)
It goes on. The name Shadowfax? Faxi means mane in Icelandic. If Tolkien had gone with Icelandic for the entire name, it would have been something like Skuggafax, which, sorry, just doesn’t trip off the tongue.
So if there’s any place that could be Middle Earth, other than New Zealand, it would be Iceland.