I've always thought that those playing O(A)D&D without a pretty good grounding in the "Suggested Reading List" were akin to those attempting to play a Start Trek rpg without ever having seen an episode. You saw the problems that arose in all the "but this isn't how it was in LotR" letters to Dragon that began from the beginnings of the game.
This changed in the late 1e years, essentialy beginning with Dragonlance and has continued right on to the present day. What happened is as someone earlier said, D&D became its own genre. From about 1977 to the mid-80's, the Shannara books and Star Wars really changed the popular view of what fantasy was about. First, they hard-wired "the story" into the genre, ("The story" = young boy who's really someone important is taken from his home by whacky old dude who's really a wizard and they and their stock group of companions conquer the evil overlord) making the genre far more conventional. Second, fantasy became a lot more mainstream. Book publishers realized simply printing Tolkien rehashes would sell. Hollywood started making fantasy movies (Conan, Ladyhawke, Beastmaster, etc., etc.) Third, partially as a result of the first and second, and partially on its own merits, Dungeons & Dragons became very popular. This lead to innumerable books being based on D&D, D&D putting out it's own books, and then D&D products based on these books. The whole genre became very self-referential. The D&D of today is based upon the D&D of the past as much as anything else.
Is that a good or bad thing? I'm really not sure. I suppose it depends on what you want. As for a suggested readings list, I don't know that the D&D of today could put out a suggested reading list that fairly portrayed the world without using D&D books. (I think this is partially true because in our more lititious society of today, an author or his estate might object... "If your game is supposed to portray my works, I'd appreciate a few royalty checks...")
R.A.