The makers of the smash hit “Lord of the Rings” films said on Tuesday they settled a legal dispute and agreed to make two movies based on J.R.R. Tolkien’s “The Hobbit,” but most likely without Peter Jackson directing.

Oscar winner Jackson, however, has signed on as executive producer along with his wife and producing partner, Fran Walsh, who also was instrumental in making the three “Lord of the Rings” films that earned $3 billion at global box offices.

In recent months, loyal “Rings” and Tolkien fans loudly proclaimed on Internet sites that they would not support a Hobbit movie without Jackson’s involvement, and Tuesday’s announcement brought them some welcome relief.

I figured the Hollywood wrangling would end sooner or later – studios can’t make money by stubbornly refusing to compromise and insulting the other players involved.

So New Line, MGM, and Jackson have worked out a deal. Here’s hoping the two films they release are as good as the first trilogy.

BusinessWeek has a good writeup about the back room dealmaking that made this happen, and TheOneRing has a post suggesting what we might see in the second Hobbit movie, which may be a “bridge” between the original book and the Lord of the Rings.