The Hobbit is an incredibly different book from LoTR, in many ways.
The Hobbit is directed to a completely different crowd and the tone of the story is uncomparable to LOTR. However it is still based in ME and involves a few of the same characters. I believe that if The Hobbit it should be almost an exact replica of the book (unlike LOTR it can be done because it is much shorter and less complicated.) Although if The Hobbit is created into a movie it will be based on the same characteristics as LOTR and not sugar coated for children, as The Hobbit was originally written for. You can definitly expect the same amount of violence and gore as LOTR.
Obviously they should keep the setting of the movie in New Zealand, to change it would be uncalled for. Although British Columbia, Canada would be my 2nd choice if there was any other option for ME. Mountains, huge forests, the Pacific Ocean, lakes, plains, ect... everything they need at their disposal.
As for Dune I've never read the books nor watched the movies, however, I have heard of it. I recall them even making a computer game based on it, and the funny thing is I think i played it but it's been so long ago now I can't be positive.