Not only do I think he would be the best director for this, without Jackson, you lose WETA. Without WETA you lose Gollum (who is moderatly significant in the Hobbit). Not to mention you probably won't get Ian back for Gandalph.
That's to many lost pieces for me to get too excited.
That article is rather old news, october 2006, even though not much has happened since then.
"The Hobbit" without Peter Jackson directing, WETA, and the visual Middel Earth of Alan Lee would break the Cinematic continuity. Shame on New Line to have made this mess, or these films would already been in production.
If New Line and MGM doesn't get this off the ground soon, the rights will go back to Saul Zaentz, and then it will be Peter Jackson all the way.
Here are some of the more sensible speculations 'round this, from june, with a follow up link from 21 july at the bottom of the page.
If they are going to do it differently than Peter Jackson, then they should at least base the visual style on the paintings by the Brothers Hildebrandt. To me, those remain the definitive visions of Middle Earth (especially their painting of Smaug.)