So the (maybe) good news is that New Line is planning to make a movie (or two) out of JRR Tolkien’s "The Hobbit." The bad news is that Peter Jackson and Fran Walsh will most definitely NOT be involved with the project. (They said so themselves!)
From Mr. Jackson & Ms. Walsh, by way of TheOneRing.net: "However last week, [New Line exec] Mark Ordesky called Ken and told him that New Line would no longer be requiring our services on the Hobbit and the LOTR ‘prequel’. This was a courtesy call to let us know that the studio was now actively looking to hire another filmmaker for both projects.
Ordesky said that New Line has a limited time option on the film rights they have obtained from Saul Zaentz (this has never been conveyed to us before), and because we won’t discuss making the movies until the lawsuit is resolved, the studio is going to have to hire another director.
Given that New Line are committed to this course of action, we felt at the very least, we owed you, the fans, a straightforward account of events as they have unfolded for us."
Click here for the full letter, which is actually kinda sad. 
