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Saruman may be the wicked wizard who's the main villain of The Two Towers. But by the time we reach The Return of the King, after his fortress at Isengard has been destroyed by rampaging Ents, Saruman isn't much of a threat. In fact, the first time we see Saruman in this novel is in the Misty Mountains as Frodo and Company head back to the Shire, where he is hobbling on foot and in rags, followed by his hateful servant Wormtongue. We'll chalk it up to just deserts.
You might wonder why Tolkien bothers checking in with this washed up wizard at all. We think Saruman reappears in The Return of the King to show what bitterness can do to a once great man. Saruman is so eaten up by his disappointment, embarrassment, and hatred that he dedicates his life to getting revenge on the hobbits. The hobbits! That's proof right there of how truly patheticSaruman has become—all he wants to do is bully some hobbits for fun under the ridiculous fake name of "Sharkey."
By the way, Saruman thinks that the nickname "Sharkey" that his orcs gave him is a term of respect, since, you know, sharks are big and dangerous. But no, the name comes from an orc word for "old man." This guy has really fallen a long way from the days when he was the respected and honorable leader of the Council of the Wise.
Why does Saruman run to the Shire in the first place? As it turns out, we get hints that Saruman has ties to the Shire throughout the previous two books.
There's that evil-looking friend of Bill Ferny's whom Frodo & Co. meet in the town of Bree in The Fellowship of the Ring. He's part-orc, just like the creatures Saruman is busy making at Isengard. And among the ruins of Saruman's fortress in The Two Towers Book 3, Chapter 9, Merry and Pippin find some Longbottom Leaf, a valuable brand of pipe-weed that grows only in the Shire.
The fact that Saruman heads for the Shire after he escapes from the Ents at Orthanc wraps up loose ends from the earlier two books by confirming that he has been in contact with bad hobbits there all along.
The Shire seems like such a protected place at the beginning of The Fellowship of the Ring, like nothing bad could ever happen there. But once we get to The Return of the King, we see that Saruman has been influencing certain people in the Shire throughout the books. The Shire is a kindly, decent home for the hobbits, but it's still part of the same Middle-earth that all of the other characters live in. It doesn't escape the War of the Rings unscathed, and it's not totally safe from evil. But that damage just provides a reason for our Sam, Merry, and Pippin to rebuild the Shire to be better than ever.
In our "Character Analysis" of Frodo, both from The Return of the King and The Two Towers, we keep going on and on about his forgiveness of Gollum. But considering what "Sharkey" has done to Frodo's beloved Shire and what he tried to do to the entire world, we feel like Frodo's mercy towards Saruman is the real triumph.
After the hobbits have retaken the Shire and defeated Saruman, Saruman tries to stab Frodo right in front of Bag End itself. There is a moment when it seems as though Sam or the assembled hobbits might kill Saruman out of sheer rage. But Frodo steps in and stops them:
No, Sam! […] Do not kill him even now. For he has not hurt me. And in any case I do not wish him to be slain in this evil mood. He was great once, of a noble kind that we should not dare to raise our hands against. He is fallen, and his cure is beyond us; but I would still spare him, in the hope that he may find it. (6.8.228)
Once again, Frodo preaches peace. It's not the right of an individual to deprive another individual of life, no matter what they might have done to deserve death. And Saruman finds his death soon, anyway, at the hands of Gríma Wormtongue, who slashes his boss's throat out in revenge for his constant verbal and physical abuse. Saruman's cruelty literally comes to stab him in the back.
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