I think Bilbo can be one of the most powerful Hobbit heroes, if you use him correctly.
People can't stand Bilbo because of his 9 threat cost and terrible stats, and that is very understandable, but if you have him in a one-player Hobbit deck he can be very useful. Hobbits rely on their deck, and drawing 2 cards a round can, in some cases, be crucial. Plus, 9 threat won't be a problem if your other heroes have a total of 12-15, and his 2 defense is only beaten by Tom Cotton, which is really good for those weak Hobbits. There is a ton of cards you can give him, personally I would give him Hobbit Cloak, A Burning Brand, Protector of Lórien, and...
Thorongil. This is an epic card to put on Bilbo if you are using him in a normal deck and want questing power. He can easily quest 3-5, and deal damage to enemies as well.
There are instances where you can use him in a normal deck.
Say you are playing with Aragorn, Éowyn and Bilbo. That's a total threat of 30, which isn't bad at all, and to start you quest with Éowyn and Aragorn, readying Aragorn after he quests. Soon, though, you have Éowyn defending with Golden Shield, and Bilbo questing with boosters and Thorongil. Plus, it shouldn't take too long to get those attachments because of Bilbo's effect.
Overall, I would give Bilbo a 6/10 score, mostly due to his effinciency in Hobbit decks. He is definetly not one of the worst heroes in the game, far from it, way better than Pippin, Bombur or Dori (Sadly).