Middle Earth was released in February of 1978. I’m not sure how early in development it was named, but I bet Atari was banking on the fanfare surrounding the upcoming LOTR animated feature. The Rankin-Bass Hobbit TV special had aired the previous year.
The theme has nothing to do with Tolkien, obviously. What we’re seeing is a futuristic Lost World scenario, which is why Atari could get away with using `Middle Earth’ without any copyright issues. The concept also plays off of Dino De Laurentiis’ King Kong (December 1976) and the Godzilla-mania of the late ’70s.
The spectacular art is by George Opperman, who created the Atari logo.
(Images via the Internet Pinball Machine Database, where you can find more views of the game, and The Arcade Flyer Archive)
2 Warps to Neptune 
This makes me want to tilt things until someone calls my parents and I get escorted off the premises.