...in the final act of Hellboy 2, which felt a bit disjointed and incomplete (all the same, love that movie).
So, all fanboy gushing aside, I'm still glad he's free to pursue other, more personal projects. As good as The Hobbit would have been under his direction, I don't think it would ever completely be his film. He could never do what he did to Hellboy, which was to stay true to the main character and the basic concept and then recreate that world in his own image. Between staying true to Tolkien and Peter Jackson's interpretation of Tolkien, Del Toro would have had an uphill battle to make those films truly his.
Here's hoping that all the legal nonsense gets cleared up so somebody can direct those films.