Yeah, I originally thought that they might have also continued the story by having Bilbo reminiscing whilst on the boat to the Grey Havens with Frodo, Gandalf, Galadriel, Celeborn, Elrond, etc.
Setting it just before LOTR with Bilbo telling the story to Frodo wouldn't detract from the emotional ending of Return of the King though, so I'd prefer that. There will probably be room for cameos from Sam, Merry and Pippin too.