I think if they can turn star wars in to a throroughly fluffy kid-pulling enterprise as per episode I, they could equally twist the Hobbit to represent portions of the darkness portrayed in LOTR. Its all there - the goblins, the flesh eating trolls, smaug the dragon, a forest full of giant spiders, epic battle at the finish, etc - it will all come down to Jackson's visual interpretation. I for one reckon it would be fantastic!