Go with the same design of hobbiton and gandalf as lotr only a little age difference on gandalf and it would be fine.
The only thing i have reservations and worries about really other than beorn, gollum, the riddle contest is handled is really smaug the dragon.
Bilbo looks a little too tall for a hobbit but i am sure that will be fixed in the final movie. Not too sure on the actor chosen but i won't know until i see the film. I do hate that its being shot on video in 3-D and not on super35 film. Like the rings films.