In conclusion, yes, Sword of Shannara is highly derivative of The Lord of the Rings but that doesn't make it bad. There a lot of cool twists and turns in Sword of Shannara and the ending especially. In the end, Shea is rescued from the gnomes by Panamon Creel, a one-handed warrior, and Keltset, a mute troll. This unlikely trio find the sword but do not recognize it. It just looks like one of many pieces of junk found on the battlefield.
While the others spy on troops, rescue the king, and muster the human forces, these three slowly realize that this is THE sword and that Shea must face the Warlock lord with it. They are captured by trolls and Keltset eloquently (through bearing and sign language) pleads their case. And the trolls are persuaded and bring them to face the Warlock Lord.
And this is where I think it gets really interesting. The sword doesn't do anything sword-like. It might as well be a rock or a shoe. All it does is reveal truth. First Shea faces the truth about himself and then he forces the Warlock Lord to face the truth about himself. Unfortunately, the truth about the Warlock Lord, like any undead being, is that he should have been dead long ago. So he dies.
Have you done that sort of thing in your game? Give the evil forces information that turns them to your side? Use revealing truth in a devastating way? In what seems to be a story derivative of another, I like how this story changes things in interesting ways. Don't be afraid to let things change in your game!