Rivendell was a set + green screen + miniatures + matte paintings, so either way, it makes no difference whatsoever where its shot.With the exception of Hobbiton and Rivendell, all of the locations in The Hobbit are new. I really don't think there will be a continuity issue if they move the production elsewhere.
I find it crazy that the LOTR trilogy was made brilliantly and yet a simple prequel has had so much trouble getting started.
Simon Pegg said:Martin’s the anti-me: a soul aficionado and a vinyl junkie – absolutely not a resident of the geek universe. Not the type of person who will relish the attention he’ll get for being Bilbo Baggins. Ha!”
Actually, I just thought of something...
Won't the movie being shot elsewhere actually be really bad, aside from the locations?
I mean, Weta Workshop is in New Zealand. Won't it be an absolutely massive amount of work to constantly ship stuff from NZ to wherever the film is being shot? And of course coordination will suffer as PJ wont be able to visit the Workshop whever he wants...
Weta digital isn't much of a problem as Jackson can interact with them long distance to check up on their work...
LOTR wasn't without troubles either. Peter was trying to get it greenlit as early as 1995.

Which video game?
If you watch some of the interviews with PJ found on the DVDs, you will note that he explains that the English-ish pastoral countryside of The Shire was the only setting which he found extremely difficult to match in New Zealand.Rivendell was a set + green screen + miniatures + matte paintings, so either way, it makes no difference whatsoever where its shot.
Hobbiton however I can't see retaining the same feel if its not shot where LOTRs Hobbiton was...
I have an idea for Smaug.
What if they went a similar route as the Angel of Death in Hellboy 2, and had Smaug's voice be a fusion of a male and female voice. It would give Smaug an otherworldly, inhuman, and androgynous quality.