A realistic (and therefore to some degree sympathetic) villain's purpose is to be defeated. I agree that if your villain (or your hero) is portrayed one-dimensionally, you haven't told a good story.

Today's market divides (like films) into roughly two categories: 'serious' literature with grim characters in grim, plotless novels and 'entertaining' books about crude, crass, juvenile nonsense of interest to virtually no one. There are exceptions, but rarely.

A 'serious' novel about a Latina transgendered professor of eco-anthropology battling the evil forces of 'big business' to save the rain forest in Africa would go over well. An 'entertaining' novel about some dippy ex-housewife searching the world's desert locations for the perfect tan, dripping with cynicism to suggest that humans can never be anything better than this creature, might also get a favorable consideration.

But even such lightweight but skilled writers like Ken Follett and Jeffrey Archer would probably never get published if they were starting out today, unless they had personal connections.

If there's a literary agent alive who is not a nihilist, left-wing, or post-modern I've yet to run across him or her after five years of serious searching.

"Beren" and "Luthien."

Or maybe I should say, all those characters function within the story as "the bad guy."

I think you're mistaking "realistic" for "morally ambiguous."

Tolkien's parents both died when he and his younger brother were still children. He was raised by a Roman Catholic priest, and he remained Catholic his whole life—one of his sons became a priest.

Here's a story that tells you a lot about him. He fell in love with the woman who would become his wife while he was at college. His guardian, the priest, forbade him to see her because she'd interfere with his studies. He wrote her one letter explaining this and dropped all contact. The day he graduated, he went to her and proposed.

Read "The Letters of J.R.R. Tolkien" and you get a good view of the man. I was most impressed with his response to the German publisher who wanted him to certify he was not a Jew before they'd publish the translation of The Hobbit. The letters he wrote in answer to fans are fascinating for anyone who loved LOTR.