As for the "where do you go from Tolkien" question, the answer is, as some have said, downhill. He was the greatest, no question. There are a few who are nearly as good, but not many, and the vast majority are lousy. I love epic fantasy with Elves and warriors and such, but most of it is so derivative of Tolkien I've almost given up and switched entirely to "Discworld".
Oh, I thought of a good series to read, one for young people actually (10-15) but I quite enjoyed it: the Enchanted Forest Chronicles by Patricia Wrede. There are four in the set, quite funny, but they really don't make much of a distinction between good and bad magic, so if you disapprove of 'good' witches forget the recommendation. Otherwise it's quite funny. I believe the first is Dealing with Dragons, the others being Searching for Dragons, Calling on Dragons, and Talking to Dragons. Not sure of the names and order but it's something like that.
Is the Discworld series really that good? I have a friend who thinks it's great, and Hal Clement (an sf author I respect) is also a fan. The series has always looked to me to be absurdist--sort of in the tradition of "The Hitchhikers Guide To The Galaxy" and the Xanth series. I like both of these bodies of work, but absurdism is not my theme of choice. So I have avoided Discworld. Am I making a mistake?
BTW--I think you are right on target regarding the confusion of fantasy and sf. It really bugs me when librarians and book-stores put them in the same section (which is all the time, basically.):
"Let's see--they're both about stuff that isn't real, so they must be the same genre."
Grrr...