Peter Jackson will indeed DIRECT The Hobbit! This is my second source telling me this. You can be 100% SURE that this is happening. The story will be split into two separate movies as was previously thought with the second relating much more to Lord of the Rings than the first. Wait, as if that wasn't enough: Here is the kicker people: The Hobbit will be in 3D.
The sources of this info are the same ones that originated the recent Avatar alien image.
But wait, there's more...
According to those same sources, New Line and Peter Jackson are then planning on converting the Lord of the Rings trilogy into 3D as well, and re-releasing them in theaters between 2012 and 2014! Personally I don't know how you'd convert a 2D movie effectively to 3D, but if it's being talked about I'm sure they have an idea.
If this all turns out to be true (and Marketsaw is pretty damned convinced it is), this is a huge validation for 3D as the next generation of technological advance for the movie theater experience.
This is not official and has not been announced by New Line or Peter Jackson, so you can't take it to the bank, but it's sounding pretty solid. Given the growing momentum for 3D and having names like James Cameron (Avatar), Robert Zemeckis (Beowulf) and Steven Spielberg (Tin Tin) pushing for it I'd say it's likely a solid story.
Can you imagine watching the Lord of the Rings trilogy on the big screen again, but in 3D?