I’ve seen him mentioned for Bilbo. He is very hobbity.
We haven’t discussed a LOT of casting issues... mostly just figuring out which actors might return. Aragorn, even for some bit parts... Legolas too I hope could come back, just to give the continuity to the whole series.
I agree he’d make a great hobbit, and isn’t he going to be in Wanted with Angelina Jolie, too?
As far as other actors go, I read on Ain’t it Cool News (I think that was the site) the other day that Viggo Mortensen had already been signed for The Hobbit, along with Ian McKellen and Andy Serkis. I can see cameos with Orlando Bloom and Liv Tyler happening, since Legolas and Arwen could easily be ‘background’ people in quite a few different places. I don’t think Ian Holm could work as Bilbo, because Frodo and Bilbo were the same age when they went on their respective adventures, and the books seem to imply that Gandalf at least visited Bilbo a few times afterwards.