Well, assuming this still gets made after ROTJ, I'd suspect it would look a lot like Willow. Although I'm sure Lucas would try to make the Shire look like what's described in the books, it won't be as well done as Jackson, and it might come out more like Willow's village.
Warwick Davis would play Bilbo, he's too young for Thorin. Phil Fondacaro (also in Jedi and Willow) would probably be in it, he might play Thorin, or one of the other Dwarves.
I don't know if Opie, er, Ron Howard would still direct it, or if they'd get someone else. No reason he couldn't, and Lucas and he already have connections with American Graffiti.
Of course, a better choice would be Terry Gilliam, now that would be interesting... could Lucas and Gilliam even work together? And how much longer would it take to make the film? Would that butterfly, or just delay, Munchausen? Maybe Gilliam doing the Hobbit is a completely different timeline...
Kilmer's probably not in it, though. While Kilmer could still play Bard, it's not quite the same kind of role as Madmartigan, without a good deal of creative adaptation. He doesn't really fit the role of Gandalf (Peter Cushing? Richard Harris would be cool if he's old enough at that time), or Beorn (Brian Blessed is really the best one for this role, in my opinion).
I don't think this will effect Kilmer's career too much, he'd probably still go on to do Doors and Tombstone.
Gollum is almost certainly a muppet, and his appearance will be compared to Yoda's for years to come.
Smaug will be the toughest part. When he's on the ground, the effects will probably be a massive mechanical design like Jabba. When he's in the air... well, Lucas's people are pretty smart, they'd probably come up with some amazing special effects technique. They played a bit with digital effects in Willow (claiming there were things that would be in the movie that had never been seen before), they could probably combine the "Muppet" Smaug on a blue screen with an appropriate digital animation to keep him from looking too much like a Harryhausen monster.