thx, Lightwizard.
I was originally disapointed that Jackson chose New Zealand over England. But after seeing the films I can fully understand why he made that descision. A lot of NZ countryside is untouched by man and looks very authentic for Middle Earth, where as present day England is a patch work quilt of farms, buildings and roads. There isn't one scrap of England left untouched. Anyway, the New Zealand locations all looked great and the Rohan set really fitted the description in my minds eye.
But yes, the British Isles back in old times I can imagine would have been the perfect setting for the Shire and no doubt the rest of Europe for other parts of Middle Earth. (Accept for Mordor, lol, I can't think of any country that looks like that hell hole).