[Rumil]

I see little problem with the fast divergence of men and hobbits.

As you no doubt know, there are still today many people who are 'dwarves' (hope this is a non-perjorative term), due to a simple genetic mutation. However, sadly, the child of two 'dwarves' is unlikely to survive. With a bit of poetic re-jigging of the DNA it would be easy to imagine that this could be remedied and that a race of short people could be possible.

The key thing would be that the 'dwarves' or hobbits if you like, lived in isolation from men for some time and did not inter-marry. This sort of 'fast evolution' could be facilitated by a gross perturbation of the ecosystem (ie. a disaster), such as, perhaps, a Dark Lord setting up shop in close proximity and wiping out a large part of the population, forcing small scattered groups to live secretly and eschew contact with 'outsiders'.