After a contentious battle between Peter Jackson and New Line Cinema over revenues from the Rings trilogy, the two have finally made nice, put a couple of flowers in each others hair, and smoked the peace pipe (or whatever Pippin and Merry were smoking in those movies). Peter Jackson was upset because he felt New Line was hiding some of the profits of the Ring movies and requested an audit, which New Line refused. Jackson then went the route of suing New Line.
What's changed? Well, The Golden Compass bombed for one thing, meaning New Line was left without a flagship fantasy series. Also, they both probably realized that they could make boatloads of money on The Hobbit so all this fussin' and a fightin' was worthless.
To make things more complicated, MGM had a distribution deal, and supposedly, through some weird system, owned part of The Hobbit as well. A while back, MGM then claimed that a Hobbit film would not go through unless Jackson was on board. Much of this is speculation and rumor.
It looks like Jackson won't be directing, but rather producing where he will sign off on all creative aspects of the film. This is fine by me since The Hobbit has a much more innocent tone than the Ring trilogy. My vote is for Peter Weir and maybe he can find a role for Harrison Ford since most of Ford's best work was with Weir. Although, I hear that if the plot doesn't revolve around Ford saving his family then he's out. You can find a more detailed story here.
It looks like things are moving along much faster than anticipated. I found some test screenings here:
Leonard Nimoy as Gandalf? Stranger things have happened...
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