hippo read on a different site, that the first would be all hobbit, and the second would have something to do with the simirillion and unfinished tales.

That doesn’t seem to be the direction that they’re taking. It looks like they will divide The Hobbit down the middle.

If I took this route (which I would, considering any prequel must set up Fellowship of the Ring... no easy task), I would put much more information into the fold than what actually takes place in the book.

For instance, introducing Legolas and Arwen at their respective homes. I know that, at the time of the story, Arwen is actually in Lorien, but... meh. No one will whine about that. Legolas would fit perfectly into the story, however, seeing as his father is a key player.

The White Council can be included, as well as the unmasking of the Necromancer at Dol Guldur. I think adding all of this will be difficult, as it really has little immediately to do with Bilbo (only indirectly through the Ring, which is *not* the heart of the Hobbit’s story). As long as Jackson propels the Ring to the main character that it was in the trilogy, it will work out.

Where to cut it, though. That’s tricky. My intuition tells me to end the first movie as Bilbo enters Thranduil’s caves, either before busting out the Dwarves or just as (creating a cliff-hanger in both cases). In that fashion, the first movie would introduce the Ring, introduce every character needed to drive a second movie, and move the plot along far enough to make people interested.