1.Similar to the Ass Gnome. An ass hobbit is a fat midget born of a persons anus and normally has large amounts of anal moustache. Though slightly larger than ass gnomes the two are easily confused mainly because they have very similar appearance, indeed most of the time they both normally have toffee bracelets too.
2. May be used to insult a gay dwarf.
"Dude is that an ass gnome or an ass hobbit?"
"You should know, haven't you given birth to an ass gnome?"
"fo shizzle ass hobbit, haven't you got some rectums to invade?"