Maybe this is true, but ultimately does it matter? Both the Hobbit and Willow contain a great number of elements that are common to fantasy stories in general, which is a genre that pre-dates both works by just a few years in the form of the myths and legends of the Norse people. The use of halflings aside, the two stories are only as similar to each other as they are to the source material. Did Lucas want to make a fantasy movie based on Norse folklore? Obviously he did, as we have Willow. Did he want The Hobbit to be that story? Maybe. That doesn't really matter, however, and here is why: If Lucas is somehow culpable for this, he is no moreso than Tolkien. The plot differences between Willow and The Hobbit are enough that he didn't do any worse to Tolkien by borrowing the concept of halflings than Tolkien did to Edward Wyke Smith when he borrowed the Snergs as the inspiration for Hobbits.
To wit: The creative process ultimately is about taking ideas from various sources and re-combining them to create new frames of reference for them. Harping on someone about an otherwise original work because he happened to use dwarfish, unassuming people and so did Tolkien seems counterproductive to the creative process. As a writer I actually like it when people can see where I got my ideas from, it shows that I'm accurately representing my sources in the new context I've created for them. I don't like it when people ask if I stole from my source material.
