From the NY Times
It was left to another studio entirely, MGM, which owns the distribution rights to “The Hobbit,†to step in and calm the raging waters — and the Web sites.
“We expect to partner with New Line in financing ‘The Hobbit,’ †a spokesman for MGM said. “We support Peter Jackson as a filmmaker, and believe that when the dust settles, he’ll be making the movie. We can’t imagine any other result.â€
NY Times
I sure hope it works out - I feel exactly as MGM does.
Form what I've read, the second LOTR prequel (the first being the Hobbit) would likely be about events between the Hobbit and the start of the Fellowship of the Ring - ie between Bilbo's 33rd birthday and his eleventy-first.
And Tony, regarding the Hobbit: ppppppppppppppthhhhhhh!!!! I love the story. It's not as dramatic or sweeping as LOTR but it has a lot of cool scenes. Plus I have fond memories of reading it aloud to both my daughters. (Got part way through LOTR with daughter #1 before she lost interest, but with #2 we've read the Hobbit, all of LOTR, and all of the Harry Potter books aloud together - and will keep on with them, even though she will be 18 by the time the last HP book comes out)