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I'd lean towards the Shire being closer to the Icelandic Free State (ie Iceland in the Saga period. Iceland was effectively a farming community, without the kind of hierarchical structure found in other Scandinavian countries, with law being held as paramount. To what extent the Shire Moot was equivalent to the Althing is probably unanswerable.
Yet, Iceland was more violent than the Shire - though less violent than it is often perceived by casual readers of the Sagas - & there was probably less need for arbitration in neighbourly feuds.
I was struck by the way Icelanders built turf houses which, due the the effect of weather would become absorbed into the landscape - after all 'Holbytla' is translated 'hole-builder' rather than 'hole-digger'. The similarites between the Icelandic long houses & Bilbo's Hobbit hole, with its rooms leading off the main tunnel, are again worth pointing up. Icelanders would often add extra rooms to their longhouses by knocking holes through the walls & building on (often for protection - latrines were often added as extra rooms in order to avoid the need to go out after dark in response to a call of nature & risk attack by enemies at night).
That said, the Hobbits seem to have inflicted less damage on their environment than the early Icelanders, who weren't averse to using slash & burn tactics to clear the little forest they found for grazing land (though perhaps there's an echo of that in their treatment of the Old Forest). Of course, the Shire is a far more temperate place than Iceland & there would be less of a struggle for survival.
Certainly, The Shire has been related to Anglo-Saxon England (by Shippey among others), but I can't help feeling that the Iceland of Tolkien's beloved Sagas, with its 'anarchic' social structure, did contribute something to the 'soup'.
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