This might be true. The LOTR wasn't designed as an RPG, and I am not enough of a Tolkien nut to weigh in on how much Simlarillion benefits the story itself. But I think the issue is people are confusing that kind of world building with all world building. Just because players aren't interested in completely irrelevant material that gets into the deep history of the setting, that doesn't mean the players are not interested in the setting. Like I pointed out earlier, factions are also world building. NPCs are world building. Stuff that gets deeper, like history, that is also material the players may have an interest in but it is likely going to be relevant to them through things like dungeons (i.e. they venture into a dungeon and the dungeon design is informed by the history of the setting, there are traces of history there for players to play with, etc).
The question of how much world building a GM should do, what direction they should build in, whether the players themselves ought to contribute to the world building, those I think are separate issues from whether players are interested in the setting
Just one observation I will make. I think world building can be overdone. It can also be underdone. Where the line is, is going to depend on your players. I know I have run into situations where players started asking about something or exploring it in game, and I realized "Man I really should have done more setting design around this". But I've also designed stuff that never came up in play and was never even indirectly relevant (personally I would rather have the latter problem than the former, but the latter is a time consuming concern so it isn't nothing either)