I totally agree that Basehead's Play With Toys and Cope's Peggy Suicide should get more love, but they were two very well-reviewed and received albums when they came out...they just got lost in time, and subsequently awful releases on Basehead's part.
A couple of my choices:
Morrissey, Bona Drag. I think his releases get marginalized b/c of the Smiths' output, and b/c his fans can be irritating, but as an overall product I think Bona Drag is underrated...the deep tracks are all good etc. etc. etc. Easy to listen to over and over...
Savoy Brown, Pure Sienna. How come nobody every talks about this album? It's weirdly funky, good songs, summer album, best product from a marginal band...never hear any of the tracks in any movies/radio etc. although they're entertaining, has that weird "slightly poppy songs about devastating drug abuse" thing that everyone points out as a plus for Steely Dan...
The Spinnanes, Manos. Just a solid, overlooked indie release...
Joan of Arc, The Gap. Breaking up the cd tracks in the middle of the songs was pretentious as hell, but the songs themselves are pretty good. There's a nice ambiance and a sweetness to the songs. Also, every person at Pitchfork needs to get punched, hard, for the sustained character assassination they've been doing on Tim Kinsella for the last six years. That guy is totally stand-up, super nice...