The callousness in their approach to Jackson with their idea of settling the legal issues with him doing the Hobbit as a matter of "the way it's done" is outrageous. Before their luck in getting LOTR, they were a second-rate company specializing in relatively low-budget slasher and frat-boy humor cult films. What Jackson and company brought to them was credibility and, with the winning of the various Oscars, prestige. As they say in the commercials -- priceless. NL and their bean-counting leadership has indeed screwed up.
Now the big question is if the other members of the LOTR team (McKellan, Serkis, Howe, Lee, Shore) would be approached to jump onto the non-Jackson Hobbit and, if so, would they do it? Or would they decline out of loyalty to Jackson or -- better yet -- decline because it COULD mean the end of their movie careers as they've known it due to the obvious backlash the LOTR/Jackson fanatics?