Of course, even if the lawsuit is settled tomorrow, there are still a few details to iron out before The Hobbit could get made. Like a script, for instance, which nobody has actually written. In the past, Jackson has suggested that he would make two films, with the second one filling in the story arc between the end of The Hobbit and the beginning of Rings. Although Tolkien never wrote a novel bridging the eras, he did scatter clues in shorter pieces and epilogues that could form the basis of a screenplay. This is not unprecedented. Jackson, Walsh, and screenwriting partner Philippa Boyens enhanced the Rings love story between Mortensen's and Liv Tyler's characters with material from Tolkien's extensive appendixes.

Still, it's hard to imagine Jackson having time to direct one Hobbit movie, let alone two. He will soon begin shooting his adaptation of the best-selling novel The Lovely Bones in Pennsylvania. And after that, he's scheduled to make Tintin with Steven Spielberg. There's speculation that New Line might offer him a deal to executive-produce The Hobbit, letting him pick a proxy director and oversee the production. That might be enough to keep fans' hearts from breaking, but would it be enough for Jackson? Amazingly, after all he's been through — eight years making Rings and several more in court fighting over it — the Shire still holds him in its spell. In fact, Jackson may turn out to be the only person who never once lost hope in the movie. Even in 2003, when his relationship with New Line was quite bleak, Jackson was still giving editions of The Hobbit as gifts. ''Great book,'' he wrote in one copy. ''Wonder when the movie's coming out??''

Reporting by Missy Schwartz and Vanessa Juarez. Additional reporting by Nicole Sperling

What do you think about The Hobbit? Would you go see it if Peter Jackson is not involved? Is there any other director you think could pull it off? How excited are you that there may actually be a thaw that would allow it to get under way? Post your comments on EW's Hobbit Movie message board

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