The drama surrounding Peter Jackson’s production of The Hobbit continues: The L.A. Times reported Saturday that the film is close to a green light while the N.Y. Times confirmed the news and added that the two epic films will be shot in 3-D. So where does the drama come in? Producer/co-writer Philippa Boyens spoke out out on New Zealand’s public radio about whether or not the film will be shot in her home country due to a brewing labor dispute. One thing is true: As of Monday morning, nothing has changed. Peter Jackson is still not officially the director of the film, which will be split into two parts. MGM, a co-financier and 50/50 rights holder on the project, still does not have a final restructuring plan in place, and, as such, production on the studio’s most prized asset cannot move forward. And Warner Bros., the other co-financier, is still deciding where the movie will be shot. This heap of uncertainty has made The Hobbit one of the most challenging films to ever get into production, even more so than Jackson’s acclaimed Lord of the Rings trilogy, which shot back-to-back after considerable studio wrangling.

One major issue that still needs to be resolved is whether or not The Hobbit will be filmed in New Zealand, Jackson’s native land and the locale for the original Lord of the Rings movies. Due to a proposed boycott by the Australian labor union that oversees New Zealand actors, Warner Bros. feels obligated to consider other filming locations where a work stoppage wouldn’t be of issue. Boyens told Radio New Zealand National that Warner accountants are looking into five or six different locales to film The Hobbit, including Scotland, Ireland, Canada, Eastern Europe, and, ironically enough, Australia. While the New Zealand Actors’ Equity had believed the studio would stick with New Zealand because Hobbiton has already been built in Jackson’s home country, that is not the case. Sources near The Hobbit confirm Boyens’ statement that filming in Hobbiton requires only a seven- to eight-day shoot. In fact, a likely scenario could involve staying in New Zealand for those eight days and moving the rest of the production elsewhere, a situation that would deal a severe financial blow to the country’s film infrastructure, which Jackson himself has buoyed immensely with the LOTR franchise and his WETA special effects studio.

Still, sources are confident that filming could get underway by January as intended. Warner and its New Line division have been busying themselves recently with, among everything else, clearing up rights issues that remained with the J.R.R. Tolkien estate. And MGM seems to be wrapping up its financial woes, with Spyglass’ Roger Birnbaum and Gary Barber set to manage the studio following its financial restructuring. Assuming those issues are settled by January, Jackson is expected to sign on officially at that time. (The director is unwilling to officially attach himself if the first movie can’t be released by December 2012.)

All in all, despite the reams of drama surrounding this project, Bilbo Baggins returning to Middle Earth is a likely reality. Let’s just hope Jackson can capture an equal amount of drama on camera that he and the Hobbit team have experienced off.