Peter Jackson explains:
It was something John was driving, and J.R.R. Tolkien still had the film rights at that stage, but he didn’t like the idea of the Beatles doing it. So he killed it. McCartney felt that its demise was probably a good thing, as it would’ve put the spotlight on Lennon, who wanted the showiest role, and potentially irked the other Beatles: “The strength of the other films which we made is that we’re all equal.”
Blastr reports that John Lennon would have been playing Gollum, Paul McCartney was lined up for Frodo, Ringo Starr would have taken the role of Sam and George Harrison would have played everyone’s favorite bearded magician, Gandalf.
The prospective director was at least as interesting as the cast. The Beatles had apparently lined up Stanley Kubrick to shoot, before he made 2001 – which could have made the movie awesome or sullied Kubrick’s otherwise stellar reputation. [Blastr via Digg]