There are a ton of ways that a sequel to Lord of the Rings could work. It could be about the generation after Aragorn stuggling to keep the peace - and succeeding. It could be about a small band of characters uncovering a lost Elven relic. There are endless possibilities. Now, if Tolkien just didn't feel like writing those stories, that's fine. It's his perogative to write the stories he wants to. But there's no reason the sequel would have to escalate, and there's no reason a competent writer like Tolkien couldn't write a story that maintained the ending of LotR if he wanted to.