In my opinion, the cutting of Bombadil is probably due to one thing ... time.

That is what I am hoping at least, I for one would love to see all of those nice events, Old Man Willow, the house of Tom Bombadil, the Barrow Downs as you all know. Yet I feel one would be hard pressed to incorporate Bilbo's party, the wonderful and probably lengthy "The Shadow of the Past," where Gandalf tells Frodo of the history of the Ring. The meeting of Strider at Bree, the Flight to the Ford, The Council of Rivendell, Moria, Lothlorien.... my my, this is the FIRST movie!(I'm thinking the first movie will represent most of this as does the first book, that is speculation)

I have no problems with the exclusion of some things in order to get the most out of what some would probably consider the major scenes of the first book. I also feel that if you were to accurately present his character, you would have to include most if not all of the dialogue between the Hobbits and him. I'd rather not see him at all, then see him portrayed as some homeless woodland fairy, spouting nonsense, and his only purposes being to free the Hobbits twice from the Willow Man and the Barrow Wights. Bombadil should certainly be given time to be explained in my opinion, and it might prove too much for the rest of the movie's time constraints.The Elvish blades instead could be given to the Hobbits by Gildor Inglorien's Elvish company or they could be given to them by the Elves of Rivendell I am thinking.

I don't mind the exclusion of some things due to time, it's the addition of new things that concerns me most, granted the finding of the Elvish blades in this case would be a new thing, yet I feel it is far less profound than say, Arwen Warrior Princess =)

On the other hand, one thing I wouldn't like though, is to see Bombadil cut just to make room for some new and contrived scenes.

I suppose we shall have to just see for ourselves, there was also rumor of Jackson filming the Bombadil scenes for a special DVD edition, how he would pull this off without greatly differing from the actual movie is another interesting thing that remains to be seen.