Re: Fatal Flaw?
The Sauron-Frodo thing makes an important point: you can tell stories from multiple points of view. You could make Sauron the hero, tell the story from his side. (Somebody did this online somewhere - he's trying to overturn a racist hegemony).
But one needs to be careful with this. In a good story, every character has strong motivations, they want something - that means anyone could be the protagonist. I mean, imagine Boromir as the tragic hero of LOTR: he's sent on a quest to find a weapon he needs to save his people, he doesn't get it, and millions die in a war as a consequence.
As Bill has pointed out, often in action movies the hero is reactive: in Die Hard, no bad guys = no movie. No John McClane ... well, you still kinda have a movie there, albiet a very different one.
Nevertheless, the hero is driving the particular action of the film. Die Hard with Holly as the hero is a very very different film, even though the bad guys are the same and have the same plan.
In LOTR, Frodo's decision to take the Ring to Mordor drives the particular action of the film. In the absence of Sauron's plan for world domination, that quest doesn't exist, but that doesn't mean Frodo isn't the protagonist.
There is a larger story of which Gandalf is the protagonist - his war against Sauron, as part of the council. The events of the books end up being the third act of that story - the pieces Gandalf has set in motion in his life up to that point (digging through ancient books, developing relationships among the various races so they would be ready when the time came, seeking out the one ring) all come to fruition. But that is a story Tolkein didn't tell, we only get echoes of it (Gandalf talks of his encounter with the Necromancer, etc).
Similarly, you'd go back even farther if you were going to tell the story where Sauron is the hero, back before the creation of the rings of power, which is probably the first-act break in his story. (Not having read the Simarillion in its entirety, I don't know all the details of Sauron's history, so that's a bit of a guess). In that story, the events of the books are, again, the third act: he discovers that his ring has been found, and declares himself openly in a final bid to destroy the hegemony of the Elves.
But that should of storytelling jiu-jitsu shouldn't obscure the fact that the protagonist is the hero of the story by definition, the one who drives the action.
Sometimes you have a story where the point-of-view character isn't the protagonist (eg, "Shane") - where we see the hero through the eyes of someone else. That might be the sort of thing the original poster is talking about here, I'm not sure.