[Eomer of the Rohirrim]

It was considered in Hobbit circles even before Frodo left that he and Bilbo were 'away with the fairies', so to speak. After he came back to the Shire with (let's face it) all these ridiculous tales about Elves and Orcs and Mountains of Fire, it was generally regarded amongst those in the community that young Baggins was completely off his head.

This comes across even in the Red Book, Frodo's personal propoganda. I can only imagine what an objective view would consist of.