Yeah, I just recently found out what the end of the books are in comparison to the movie, and for there to be a conflict at the Shire at the end of the movie, would have meant at least another 1/2 hour of movie to watch. That would be 4 hours worth of the last movie. Not that I would have minded that, as I love the action scenes they did. But for the average movie go-er, I think 4 hours is a long time for a movie--thats really 2 movies worth. So I think they realized they had to end it soon.
As far as characters getting gipped (sp?) well, yeah, I can understand the Lord of the Rings' fans getting somewhat disgruntled about that, but in the same aspect, I think they wanted to prevent putting in too many major characters, so those who were considered less important, yet had big lines in the book, they could have felt that they could have transfered those lines to more important characters to avoid complications.
But, Im not the director, and I cant say exactly what he was thinking about these things, Im just taking a guess.