Yup, had he stuck with the source material and even the appendix (omitting the love triangle, omitting/limiting the
CGI battle scenes, etc) and it would have been a great movie, maybe even a great set of 2hr (instead of 3hr) films.
I think we all knew the source material of the Hobbit wasn't going to be on par with LOTR, but the source material portions of Peter Jackson's Hobbit are the best parts.
The film had plenty of potential, a bit of over-reliance of CGI and the non-Tolkien dialogue really hampered it.