You do know that he was convinced by his dwarf friends about goin into that quest?in a clear reference to the hobbit book,so you can use Bilbo's as reference for his profile,or you can simply ignore all the well stablished lore about halflings/hobbits and just throw them in the same pool as the dwarfs,it makes no difference to me(althought i wouod love to see a female dwarf in a future update)
I'm not throwing anything into a pool, that's key to my point, individuals are individuals, established racism is still racism.
Your point about Bilbo Baggins proves my argument not yours, Bilbo was raised in/and embraced the Hobbit Culture, but proved that he was not a stereotype, he grew into his role as a thief, and when he returned to the shire he found he couldn't settle back into that life he found so comfortable before. Frodo, Sam, Pippin and Merry where the same, each grew beyond the roles they would have settled into.
Maybe read the books you reference?