TheOneRing.net reports that rebuilding of Hobbiton has begun for the filming of The Hobbit and its sequel. The first film is scheduled for a December 2011 release, followed by the second film in December of 2012. The site says:
The re-building of Hobbiton has begun, with the planting of hedgerows and fruit trees. An extension to the path that passes in front of Bag End has been marked out also. There will be several new Hobbit holes dotted along its length.
Click the pic below for three more photos!