I'd rather see The Hobbit on the list than The Silmarillion.

I would go along with that, but The Hobbit doesn't fit the rules for the first list; it was first published in 1937. You can add it to the second list.

I would want to add to the second list:

The First Book of Lankhmar, Fritz Leiber although this is a collection of short stories originally published separately.

Without Fritz Leiber's Lankhmar, Terry Pratchett's Ankh Morpork might not have existed.