It's his own creation. He had every right to stop it. I don't see how this is wrong at all.
Art has asymmetric upside – bad art doesn't really harm anyone (usually just gets forgotten) but good art enriches millions of people's lives.
It might have been amazing. It might have been bad-but-interesting. We'll never know!
So, for example, theft should be illegal, because a world of unrestricted IP theft might be one in which we would get a lot less art. But allowing Tolkien to block adaptations of his bestseller 14 years after publication was probably not good for art.
We can't know the contrapositive but I don't see why giving the author a veto makes good outcomes more likely, especially decades after a book is published.
If Tolkien had been alive he probably would have put an end to Jackson's efforts, too.