Yes, I was also thinking of the hobbit's supposed ability to hide from men of this Age. But who would have guessed that we would find them with a high powered telescope!
Whoever came up with the designation must be a bit versed in Middle-earth. Better than me at least, for I can't recall if a height comparison was ever made between dwarves and hobbits. Certainly hobbits are slighter and more elusive, and it seems about right, but memory fails me.
I do wonder if they would entertain the idea of actually naming the galaxies after 'historic' hobbits or their towns. Most likely we will be introduced to a generation of new hobbits with names sounding suspiciously like the names of random scientists or worse yet, numbers and letters. I suppose we might see how many Tolkien fans are to be found in the pool of astronomers, but given the choice of naming a newly found galaxy after themself or their favorite hobbit, I assume that the former would prevail.
EDIT: After a bit of a search on dwarf galaxies, it seems they are named after the constellations they are found in, or near, so perhaps we will have some new and interesting names for any futuristic RPGs, Cygnus Sandheaver, anyone?