This is fantastic news. I’ve been a Tolkien junkie since I was 15 years old, and couldn’t wait for the New Line adaptation of Lord of the Rings, having been sorely disappointed by Ralph Bakshi’s version. I loved Fellowship, found it difficult to get past some of the plot changes in The Two Towers, and was a little let down by Return of the King, though it’s growing on me.
I’ll have to revisit my copy of The Hobbit again, and it will be interesting to speculate about how well it will translate to film in the hands of Jackson and co. I guess they’ll be looking for a new Bilbo, given that Ian Holm will be pushing 80 (doubtless appearing much as he does at the end of Return of the King) by the time The Hobbit is released.