In ME, the hobbits were a sort of 'link' to humans in the real world. That is one of the reasons that SIL is difficult to read; no hobbits. So, if hobbits in ME are congrous to (at least very similar to) humans, and some humans are evil, I would have to say Hobbits are capable of being evil, it just doesn't happen very often.
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"Come away! Let the cowards keep this city!"
-- Fëanor to the Noldor
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