Style and Medium
One of my main motivations behind starting this project was--and still is--what I percieve as an oversaturation of visual art directly inspired by the Peter Jackson film adaptations. (Both trilogies.) This is not to say that I dislike that art. On the contrary; the work of artists John Howe and Alan Lee (and the rest of the creative team at Wētā Workshop) is magnificent, and deserves the praise and acclaim it recieves. However, my love for their art does not lessen my frustrations with trying to find more original designs.
I do think it's likely that this seeming lack of diversity is due to modern image search algorithms, or I'm just particularly bad at wording my searches. Regardless, this issue only grows as more Tolkien screen adaptations tie themselves to the Jackson trilogy.[1] As such, part of this project is devoted to finding a general concept regarding visual design and artistic medium.
Animation or Live-Action?
Before I begin to answer this question, I must confess that I am not actually certain enough to make a final decision. While I do not end up with a concrete answer, I can at least discuss the strengths of each medium.
First I should address the oliphant in the room: animation's strengths over other mediums. Animation is an inherently stronger tool than live-action when it comes to portraying fantasy or sci-fi settings. As special effects come closer to realism, the easier breaking suspension of disbelief becomes. However, this risk can be lessened by using practical effects and costumes over computer-generated ones. There are always exceptions to this rule (Andy Serkis as Smeagol/Gollum comes to mind), but take one look at the CGI orcs of the Hobbit trilogy compared to their practical Lord of the Rings counterparts, and the difference in believability is striking.
Live-action filming constraints come with another unique issue: relying on human actors to play inhuman characters. While both of Jackson's trilogies (and the recent Rings of Power series) have proven that dwarves and hobbits can be proportioned fairly accurately with clever set design and camera work, I doubt practical effect work can be implemented equally on Tolkien's elves.[2] Of course, the height of elves is a relatively contested topic, and has not been made a notable aspect of any visual adaptation of Tolkien's works, to my knowledge. However, as I will explain later on, it is these details I would like to include in my version. Animation allows for these more stylized choices, even when illustrated in a more realistic form.
However--despite animation's obvious advantages over live-action--I cannot help but find the idea of a hyper-stylized live action Hobbit film (à la Pan's Labyrinth or The Dark Crystal). Imagine the trolls as huge costume/puppet hybrids like those found in Jim Henson's Labyrinth! As is probably obvious: I honestly cannot decide at the moment.[3]
Brian Froud and Jim Henson's Fantasy Films
Content...
[1] At the time of writing this, two new Tolkien adaptations (The Rings of Power and The War of the Rohirrim) are in production, both supposedly set within the world of the Jackson films.
[2] For the unaware: Tolkien's elves are particularly tall in the original material. At the shortest, elven men were about 6.5 feet, but they were often much taller. For example, the king of Doriath in the First Age, Elu Thingol, is thought to be around 8-9 feet tall at least, making him the tallest of the elves.
[3] If I did choose live-action, however, I do have a current fancast for Bilbo and Gandalf: Warwick Davis and Donald Sutherland. Davis is the perfect age (50s) and looks precisely how I imagine Bilbo does in the books, plus he has previously spoken about disappointment with productions not casting actors with dwarfism in screen-facing hobbit roles. Also, you should watch Willow if you haven't yet.