orcs and goblins- what's the difference???

[Firefoot]

The main point for goblins being different than Orcs seems to be size. However, I think this is being looked at rather wrongly. The mountain-dwelling orcs/goblins are almost certainly smaller. This is alluded to in several places - the Hobbit, the "mountain maggots" in the Uruk-Hai chapter of TTT, etc. This is not an absolute rule - Azog, for example, was quite a large Orc. However, the mountain orcs are generally smaller. This is not, however, because they are goblins, nor are they called goblins simply because they are smaller. They are just a smaller variety of orcs. Orcs are also goblins. It is just an unfortunate point that the smaller sort are the kind in the Hobbit and the Hobbit almost always uses the word goblin. These are two separate issues that seem to have merged incorrectly into one.

From Morsul's first Downer quote:

Saruman made the Uruk-Hai by cross-breeding Orcs and Goblin men. I'm not sure, but how can you get an entire breed of new orcs by using the same breeds to breed them?

This is not correct anyway. Orcs and Goblin men. Saruman bred Orcs and half-Orcs together. Even barring that, this wouldn't make sense based on your arguments: orcs bred with supposedly smaller goblins would not make larger Uruk-Hai.