The Tolkien Library has an interview with artist Benjamin Harff, whose final project for an illustration and graphic design class was an illuminated edition of The Silmarillion.
TL: Can you explain how it was made?
BH: All the initials, the calligraphic pages and illumination was drawn and painted by hand. I used a steel-pen and indian ink as well as brushes and water colours. For the metal colours silver, gold and copper I took acrylics, because they are easier to handle than really laid gold and you can also work with water colour on acrylics.
After this all the work had to be digitalized by scanning and photography, followed by the fitting into the text.
Read the whole interview and see gorgeous images at The Tolkien Library.
Artist Benjamin Harff at work on the project