This is a great idea

. I offer my help and counsel. Not sure how much actual work I can put into this, but feel free to use any of the stuff from Hack and Slash module.
some ideas:
1) The widerness map should be devided into several maps, of course (duh, I bet you thought of that yourself). Probably a 3x3 or 4x4 grid would work best. This way you can have different monsters in different areas in Middle Earth. From the occasional Nazgul in the wilderness around the Shire to hordes of Uruk-Hai around Isenguard and in Rohan.
2) maybe a good starting point would be the Council of Elrond, since you can also take a different character then Hobbit. (Well, this is assuming that the character is the Ringbearer, not sure if you want to do that ir not).
3) Other characters from the fellowship could be nicely implemented via summoning scrolls. Make a scroll 'Summon Legolas' then he will follow you. These scrolls should be specific items of course that can be gained at certain points in the quest.
Good luck and have fun with this

,
Rollo