Regarding The Hobbit

Apparently the biggest news that's riled Lord of The Rings fans everywhere is that New Line doesn't want Peter Jackson to direct The Hobbit and whatever LoTR prequel is in the works. From my understanding of the events, even though Peter Jackson received $200 million for directing the films, he is suing New Line because he feels he deserves more money because of the profits from merchandising.

So I guess there are a few questions to ask.

What was Peter Jackson supposed to get according to his contract?
Who owns the movie rights to The Hobbit? (According to Wikipedia, it's split between MGM and New Line)

If Peter Jackson was already given what he was contracted to receive, then he doesn't deserve any more money, regardless of how much New Line makes from merchandising. If MGM and New Line own the rights to The Hobbit movie and don't want Jackson, so be it. But they'll probably want to keep the visual feel of the LoTR trilogy, so they'll film it in New Zealand and probably hire Weta Workshop and Weta Digital (I believe Jackson is a co-founder, and probably co-owner of Weta Digital. Don't quote me.) for the special effects.

From reading about some of the things he did to get his way with New Line, I'm not really surprised that they decided to drop him. Movie companies (for better or for worse) don't like to be pushed around. Usually I'd side with a director for the sake of the art, but in this case I think Jackson screwed himself over.