The Hobbit is not a long book. There is no reason in the world why a movie picture adaptation should exceed 120 minutes. Total.
If they took out all the walking it would only be 30 minutes long.
Some of us like to wallow in our fantasy. TLOTR brushed over too many potential stories for me. Eight long movies for Harry Potter seemed rushed to me. ;-)
Sure there is. Money. They're going to make three times more, more or less, with three movies than they would with one, and with significant savings in production costs.
There is an excellent reason to make The Hobbit into three movies: it allows those of us who love Middle Earth to spend as much time there as possible. I'm just unhappy that when the entire cycle is finished, we will have in total less than 18 hours in those magnificent realms.
C'mon - the theaters need longer movies to sell ore of the "economy-sized" popcorn. Besides, people want to get more for their money even if more means less.
On the flip side, movies can be like shopping - I like to do a fast in-and-out foray...