Does anyone remember Ralph Bakshi's 'Lord of the Rings' of twenty years ago or so? Not Disney, admittedly (United Artists, if I remember rightly), but the hobbits were little children and Smeagol was cute and cuddly. The balrog was a big black lion with wings. Gandalf didn't sing, though.
Given Disney's record of butchering classic works of literature (a happy ending for' The Hunchback of Notre Dame', for example) I can't help but suspect that they would have made an absolute pig's ear of it. The fact is that they are so scared to take risks these days that their animated films tend to be very formulaic and survive largely on the excellence of their animation - a crown increasingly challenged by Dreamworks, as someone else pointed out. I have not seen 'Lilo and Stitch', so cannot comment, but I have seen most of their efforts over the last fifteen years and the only one that sticks out as a fine film in its own right is 'The Lion King' - now nearly a decade old!