I really hope it's not some newly made story caught in-between The Hobbit and The Fellowship of the Ring. Man that would blow.
I think it would be really interesting if they went into the quest of the 5 wizards (2 blues, Gandalf, Saruman & Radagast) - seems like that would be another good reference point. That's one place where they get could really creative, especially with the 2 blue wizards. Their fate was left pretty open ended as I recall. Imagine season 1 being the lead up to the Last Alliance, the finale being the final battle - then season 2 we follow that quest of the 5 wizards. Now that would be cool! But of course I could see them straying away from that, as Christopher Lee passed and Ian McKellen is nearing 80. Re-casting those guys might piss off a lot of fans.
I know theres no chance this could be as good as the LoTR trilogy, but I have high hopes with the budget. Very few TV shows fail with a budget that large... minus a couple shows from Netflix like The Get Down (a whopping 200 mil for their sole season - ridiculous) and Sense8.
Either way, looking forward to whatever direction they take this. 250 mil is a nice chunk of change to work with.