By Kofi Outlaw

After tense months of conflict, the war for the future of Middle Earth is officially over, and we the audience are the victors!

The Web is on fire with the news that Peter Jackson, acclaimed director of the LORD OF THE RINGS trilogy, has finally settled his long-standing beef with studio New Line over “mishandled” profits from the LOTR films. The resolution of this feud has freed Jackson to help New Line bring Tolkien’s LOTR prequel, THE HOBBIT, to the big screen in two separate installments.

Before you jump too high for joy however, best to review the fine print of the agreement struck between director and studio, as detailed in a press release from New Line:

MGM and New Line will co-finance and co-distribute two films, “The Hobbit” and a sequel to “The Hobbit.” New Line will distribute in North America and MGM will distribute internationally.

Peter Jackson and Fran Walsh will serve as Executive Producers of two films based on “The Hobbit.” New Line will manage the production of the films, which will be shot simultaneously.

Peter Jackson and New Line have settled all litigation relating to the “Lord of the Rings” (LOTR) Trilogy.

The key point here is that Jackson WILL NOT actually be directing THE HOBBIT and its sequel. Still, with Jackson and long time collaborator Fran Walsh overseeing production and being allowed (i.e. paying for) a good deal creative input as exec producers, one has reason to be hopeful.

Said Jackson, “I’m very pleased that we’ve been able to put our differences behind us, so that we may begin a new chapter with our old friends at New Line… We are delighted to continue our journey through Middle Earth...”

Added Bob Shaye, New Line Co-Chairman and Co-CEO, “We are very pleased we have been able to resolve our differences, and that Peter and Fran will be actively and creatively involved with ‘The Hobbit’ movies. We know they will bring the same passion, care and talent to these films that they so ably accomplished with ‘The Lord of the Rings’ Trilogy.

THE HOBBIT and its sequel will be shot as a single film, and should go into pre-production ASAP. As of now principal photography is set to begin in 2009, with a tentative release date of 2010 for THE HOBBIT, and 2011 for its sequel. No word yet on a potential directors or a cast for the films. We’ll keep you posted.

Peter Jackson is back on the job—though perhaps not in the way you expected? Rant back and let us know how you feel about this shade-of-gray development.