I don't recommend hobbits because the infantry are all metal.
Wood Elves can be done, they are really cool to play.
Now, the mines of moria set comes with the mini rulebook (it doesn't contain all of the statlines for models, that's what the new sourcebooks are for) and 205 points of Moria goodness.
You can pick one of those up on ebay for about $8 though.
Now, with the new
LOTR rules, your force must be organised into warbands. Each warband must have a hero to lead it and may take up to 12 units in that warband. The entire army may have up to 33% of its models equipped with bows. Bows are useful.
Now I'll break Moria and Elves down.
Moria (one of my preferred armies) -
Sourcebook -
http://www.games-workshop.com/gws/catalog/productDetail.jsp?catId=cat750031a&prodId=prod1460079a
Basic Troops - Goblins, you can never have enough. A cave troll or two does a lot of heavy hitting for you.
Moria Goblin captains are some of the best (partly because they're cheap) in the game. Shamans can cast fury, which revives a dead goblin within range on a 6. This is very useful for a horde list. Durburz is another good hero.
I don't recommend Balrogs, Cave Drakes, or Dragons for most games. They just aren't fun for most battles.
Wood Elves -
Sourcebook -
http://www.games-workshop.com/gws/catalog/productDetail.jsp?catId=cat750014a&prodId=prod1460061a
Your basic troops would be wood elves, which have the highest fight value in game (you auto-win a combat in the event of a tie), but that isn't overly important in most cases.
Wood Elves can be kitted with elven cloaks, which stealth you from bow fire (there is a range on this). I like to run them with blades and throwing knives (you get to throw a knife (you could shoot a guy, then charge his buddy) before you charge into combat)
For leaders, I like Legolas and Haldir, the captains are quite good too.
Sentinels have their purposes in some cases, but I've never seen them.
A banner can be quite helpful (reroll a die to win a combat), but don't overdo it, they can get costly.
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