From TheOneRing.net:

Peter Jackson Close to Deal to Direct ‘The Hobbit’ | Hobbit Movie News and Rumors | TheOneRing.net™: Now his deal is all but complete, according to individuals close to the project. Both Jackson’s directing fee and percentage of the gross have been settled, though a number of lesser deal points remain outstanding.

This is great news! Now if we can just get past the threatened actors strike and MGM’s financial woes, this project might actually happen!