Peter Jackson and New Line Cinema have officially kissed and made up. In a press release sent out this morning, New Line announced that they’re at last going forward with a movie version of The Hobbit, partnering with MGM to co-finance the project. More importantly, they say they’ve settled all their litigation with Peter Jackson, and he and Fran Walsh are set to serve as Executive Producers on the project.

The question left here is of course, will Jackson and Walsh write the script and will Peter direct? They don’t say. Here’s what PJ does say: “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. ‘The Lord of the Rings’ is a legacy we proudly share with Bob and Michael, and together, we share that legacy with millions of loyal fans all over the world. We are delighted to continue our journey through Middle Earth. I also want to thank Harry Sloan and our new friends at MGM for helping us find the common ground necessary to continue that journey.”

Their plan is to turn The Hobbit into two movies, which will be shot simultaneously. Personally, I think that’s an awful idea. “The Hobbit” isn’t nearly as dense as the three Lord of the Rings books. It’s the perfect size to turn into a single film, and turning into to means they’re going to have to do a lot of stretching, unless of course the plan is to use a lot of ancillary material from some of Tokien’s other books like The Silmarillion. If that’s the plan, that could work.

But, with Peter Jackson and Fran Walsh back in charge of Middle Earth, I’m willing to assume anything they want to do will automatically work. Even if Jackson end up not actually directing it, at least now he has a say in it. Perhaps even more importantly, it’s a sure bet that WETA will be back doing the effects, which means all five Lord of the Rings movies will maintain a similar look. It’s a great day in Hobbiton folks, the future of Tolkien’s work is back on track.