I also believe his books i magnificent.
Of course, the allegory of "Leaf by Niggle" is life, death, purgatory and paradise. Niggle is not prepared for his unavoidable trip, as humans often are not prepared for death. His time in the institution and subsequent discovery of his Tree represent purgatory and [heaven]].
But "Leaf by Niggle" is also about Tolkien's profoundly religious philosophy of Creation and Subcreation. True Creation is the exclusive province of God, and those who aspire to Creation can only make echoes (good) or mockeries (evil) of truth. The Subcreation of works that echo the true creations of God is one way that mortals honor God.
(This philosophy is evident in The Silmarillion -- one Vala, Morgoth, creates the orc race as a foul mockery of the elf. Another Vala, Aulë, creates the dwarf race as an act of Subcreation that honored God (called Eru in JRRT's invented mythology), and which God accepted and made real, just as Niggle's Tree was made real.)
Niggle's yearnings after truth and beauty (God's creations) are echoed in his great painting; after death, Niggle is rewarded with the realization (the making-real) of his yearning. Or, if you prefer, Niggle's Tree always existed -- he simply echoed it in his art.
On a meta-level, then, JRRT's Middle-earth is itself a Subcreation designed to honor the true stories of the world-that-is. Thus, Middle-earth, despite its lack of overt religious elements, is a profoundly religious work.
So, on a final level of allegory, Tolkien himself is Niggle -- and, humorously, in mundane matters as well as spiritual ones. JRRT was compulsive in his writing, his revision, his desire for perfection in form and in the "reality" of his invented world, its languages, its chronologies, its existence. Like Niggle, Tolkien came to abandon other projects or graft them onto his "Tree," Middle-earth. Like Niggle, Tolkien faced many chores and duties that kept him from the work he loved. And like Niggle, Tolkien was a horrible procrastinator -- late in life, Tolkien spent hours playing solitary card games instead of working on The Silmarillion.
Finally, Tolkien himself might have disagreed with an allegorical interpretation. He wrote, in Letter 131 of The Letters of J. R. R. Tolkien, "I dislike Allegory." And in specific reference to Niggle, he wrote in Letter 241, "It is not really or properly an 'allegory' so much as 'mythical'." On the other hand, in Letter 153 he said, "I tried to show allegorically how [subcreation] might come to be taken up into Creation in some plane in my 'purgatorial' story Leaf by Niggle."