The Ombudsman ordered the Government to release documents related to its deal with Warner Brothers which allowed the film to go ahead in New Zealand.
Jackson's exasperation with the Australian union Media, Entertainment & Arts Alliance (MEAA) was evident.
In a note to Cabinet Ministers Gerry Brownlee and Chris Finlayson, Sir Peter said MEAA union boss Simon Whipp had "played us for fools".
He later said he was concerned that Mr Whipp's actions would derail the production.
In a separate note to ministers, he said: "In the end, this is not about Actor's Equity, not is it about the Hobbit - it is about an Australian trade union making a blatant play to take a controlling hand in the NZ film industry - for their own political and financial gain."
In an email to Mr Brownlee's chief advisor Tim Hurdle after the minister had met with Mr Whipp, Sir Peter said that the Government had "engaged with a snake, who now feels quite fearless".
"He is in revenge mode, intent on inflicting as much damage as he can to our film, our film industry, to our country.
"I really can't [take] much more of this toxic nonsense. All I want to do is make films! I haven't been able to think about the movie for 3 weeks."
The documents also revealed the anger of New Line Cinema - a unit of Warners - when it was informed of the unions' demands.
After the MEAA outlined the working conditions it expected before an actors' ban on the Hobbit was lifted, New Line senior vice president of business affairs Carolyn Blackwood said in an email: "I am furious. Furious."
A later email between Ms Blackwood and Mr Brownlee showed that New Line Cinema did not plan to film the Hobbit in a different country, despite its concerns about the labour dispute.
The Government warned in October 2010 that the films could be moved overseas if the dispute was not resolved.
Ms Blackwood said there was growing momentum to find alternative places to film, and asked Mr Brownlee to consider similar incentives to those offered by New South Wales.
But she reassured the minister that the company was committed to making the films in New Zealand.
"As I have said to you on every occasion that we have spoken, we are committed to New Zealand ...
"We filmed all three Lord of the Rings films in NZ and are not making any decisions to move this production lightly. If that were to happen, if would honestly be a blow to all of us."
She confirmed that the labour disputes put the company in "a very precarious position" and were a "real risk to [New Line]".
Ministers initially refused to release the documents due to commercial sensitivity, but the Ombudsman ruled earlier this month that they should be made public.
The Government made a deal with Warner Brothers in 2010 which included tax rebates and a change to employment legislation.
