The chance to charge higher ticket prices has every Hollywood studio rushing to retrofit their 2D spectacles into 3D. Some directors are pushing back, concerned there’s an imminent future of cheesy-looking 3D that will stunt the momentum created by Avatar.

“After Toy Story, there were 10 really bad CG movies because everybody thought the success of that film was CG and not great characters that were beautifully designed and heartwarming,” Avatar’s James Cameron told me recently. “Now, you’ve got people quickly converting movies from 2D to 3D, which is not what we did. They’re expecting the same result, when in fact they will probably work against the adoption of 3D because they’ll be putting out an inferior product.”

Warner Bros and New Line will start the debate on The Hobbit as soon as Guillermo del Toro, Peter Jackson and their co-writers turn in the script for the second installment within a month.  Initially, del Toro favored a 2D shoot on film, insiders said. But Warners is sitting on a potential gold mine, looking at an extra theatrical and ancillary revenue cycle if the studio spends $60 million or so to convert the original Lord of the Rings trilogy. It will be an all or nothing decision on five LOTR films, because Warners will not convert LOTR then release a pair of 2D Hobbit films that look visually inferior.  More.