You know, ever since I saw the first LOTRs movie, I've liked the layout of the Baggins home in the Shire (as displayed in the movie)...And there are some distinct advantages...For example, there is a place near Moab, Utah called "Hole 'N The Rock" (http://www.moab-utah.com/holeintherock), which is a 7 or 8 room home carved and hacked out of the rock. The guy who did it actually lived there for decades with his wife. One feature I remember is that the temperature is an almost constant 70 degrees, summer and winter.

That's very interesting. there's a great old book called Architecture Without Architects, that shows a whole village in Anatolia built by carving into into rock-spires

I personally would never want to live in a cave, but hobbit houses are not cave-like, since they have lots of windows. And they have a lot of potential as ways to build houses without spoiling some area of scenic beauty, such as a grassy hillside covered with wildflowers.

Unfortunately with current technology they could only be built with a lot of disruption--cutting a road, digging a big hole, building the house, and then replacing the soil and hoping the plants would grow back as they were...